Guerra, Inc Required:
Compute the Cost of the December 31, 2010, Inventory

question 38

Essay

Guerra, Inc.adopted the dollar-value LIFO retail inventory method on January 1, 2010, when the price index was 100.The following information was taken from company records on December 31, 2010, when the price index was 110.
$\begin{array}{lll}&\text { Cost}&\text { Retail}\\\text { Sales } & & \$ 190,000 \\\text { Additional markps } & & 18,000 \\\text { Markup cancellations } & & 6,000 \\\text { Markdowns } & & 8,000 \\\text { Markdown cancellations } & & 2,000 \\\text { Inventory, January 1 } & \$ 14,400 & 20,000 \\\text { Purchases } & 158,000 & 199,000 \\\text { Purchase returns } & 4,000 & 5,000\end{array}$ Required:
Compute the cost of the December 31, 2010, inventory.(Round off calculations to the nearest dollar.)

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Definitions:

Long Run

A period in which all factors of production and costs are variable, allowing complete adjustment to changes.

Accounting Profits

The financial gain calculated by subtracting total expenses from total revenues, according to standard accounting practices.

Long-Run Equilibrium

The state in which all factors of production and costs are variable, and firms earn normal profits in a competitive market.

Competitive Firm

A firm operating in a market with many competitors, where prices are determined by supply and demand forces.