The correct answer is $181,000.
Explanation:
According to the scenario, the computation of the given data are as follows:
Cost Retail
Beginning inventory $146,000 $220,000
Purchases $480,000 $700,000
Freight-in $80,000
Net markups $160,000
Net markdowns $(60,000)
So, first we calculate Total cost with excluding beginning inventory and after including inventory, then
Total (exclu. begin. inventory) $560,000 70%$800,000
Total (inclu. begin. inventory) $706,000 $1,020,000
Now, Less sales from the amount, we get
Sales ($750,000)
So, Ending inventory $270,000
So, Ending Inventory by LIFO can be calculated as follows:
Ending inventory $ 270,000
Beginning inventory $146,000 (220,000)
Let, Increment = $50,000
So, Increment cost = ($50,000 × 70%) = $35,000
Ending inventory can be calculated by using following formula:
Ending inventory = Beginning inventory + Increment cost
By putting the value, we get,
Ending inventory = $146,000 + $35,000
= $181,000
Hence, Ending inventory cost by LIFO retail inventory method is $181,000.