1. Change to LIFO Retail Diderot Stores Inc., which uses the conventional retail inventory method, wishes to change to the LIFO retail method beginning with the accounting year ending December 31, 2010.Amounts as shown below appear on the store's books before adjustment.
At Cost At Retail
Inventory, January 1, 2010 $ 15,800 $ 24,000
Purchases in 2010 116,200 184,000
Markups in 2010 12,000
Markdowns in 2010 5,500
Sales in 2010 175,000
You are to assume that all markups and markdowns apply to 2010 purchases, and that it is appropriate to treat the entire inventory as a single department. Compute the inventory at December 31, 2010, under the following methods.
(a) The conventional retail method.
(b) The last-in, first-out retail method, effecting the change in method as of January 1, 2010. Assume that the cost-to-retail percentage for 2009 was recomputed correctly in accordance with procedures necessary to change to LIFO. This ratio was 59%.(AICPA adapted)