[star1101]

Smith-Kline Company maintains inventory records at selling prices as well as at cost. For 2013, the records indicate the following data:

($ in 000s)

Cost Retail
Beginning inventory $80 $125
Purchases 671 1,006
Freight-in on purchases 30
Purchase returns 1 2
Net markups 4
Net markdowns 8
Net sales 916

Required:
Use the retail method to approximate cost of ending inventory in each of the following ways (Round your final answers to 2 decimal places. Enter your answers in thousands.):

Average Cost
Average LCM Cost

[rehmanvohra]

AVERAGE COST

Cost Retail
Beginning inventory $80 $125
Purchases 671 1,006
Freight-in on purchases 30 -
Purchase returns (1) (2)
Net markups - 4
Net markdowns - (8)
Goods available for sale 780 1125
Cost to retail percentage 780/1125
= 69.33%
Net sales (916)
Ending inventory at retail 209
At average cost 209 X 69.33% = 144,907

LOWER OF COST OR MARKET


Cost Retail
Beginning inventory $80 $125
Purchases 671 1,006
Freight-in on purchases 30 -
Purchase returns (1) (2)
Net markups - 4
780 1133
Cost to retail percentage 780/1133
= 68.84%
Net markdowns - (8)
Goods available for sale 780 1125
Net sales (916)
Ending inventory at retail 209
At average cost 209 X 68.84% = 143,884