As of January 1, 2008, Retail Company installed the retail method of
accounting for its merchandise inventory.
To prepare the store’s financial statements at June 30, 2008, you obtain the
Inventory, January 1
Sales returns and allowances
Prepare a schedule to compute the company’s June 30, 2008, inventory
under the following retail methods of accounting for inventories:
(ii) simple average
(iv) LIFO (stable prices).
Without prejudice to your solution to part (a), assume that you computed
the June 30, 2008, inventory to be $54,000 at retail and the appropriate
ratio of cost to retail to be 70%.
The general price level has increased from
100 at January 1, 2008, to 108 at June 30, 2008.
Prepare a schedule to