A Company Has Been Using the Retail Inventory Method,average Basis,for

question 62

Essay

A company has been using the retail inventory method,average basis,for inventory measurement.Starting in 2013,the company changed to the FIFO retail method.
At the end of 2013,the company prepared the following retail method,"pure" FIFO basis,computation which you are to complete: $\begin{array}{|l|l|} \hline&\text { Cost } & \text { Retail } \\ \hline \text {Inventory (base) at January \( 1,2002 \).}&\$ 4,840 & \$ 8,400 \\\hline \text {Purchases.}&25,803 & 41,600 \\ \hline \text {Net additional mark-ups.}&700 & \\ \hline \text {Cost ratio.}&\$ 25,803 /& \$ 42,300=.61 \\ \hline \text {Total.}&30,643 & 50,700 \\ \hline \text {Sales.}&\$ 40,400 & \\ \hline \text {Inventory at December 31, 2002 (FIFO).}&\$ & \$\\ \hline\end{array}$

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Definitions:

GIC

A Guaranteed Investment Certificate (GIC) is a type of Canadian investment that offers a guaranteed return over a fixed period.

Monthly Compounded

Interest on an investment or loan is calculated monthly and added to the principal, allowing the interest to earn interest in subsequent months.

Nominal Rate

The stated interest rate of an investment or loan, not accounting for compounding or inflation effects.

Annual Rate

The interest rate for a period of one year, often used to compare the yearly interest between financial products without compounding.