Belden Department Store uses the retail inventory method to estimate its monthly ending inventories. The following information is available for two of its departments at

At December 31, Belden Department Store takes a physical inventory at retail. The actual retail values of the inventories in each department are Sporting Goods $95,000 and Jewelry and Cosmetics $44,000.

Instructions
(a) Determine the estimated cost of the ending inventory for each department on August 31, 2014, using the retail inventory method.
(b) Compute the ending inventory at cost for each department at December 31, assuming the cost-to-retail ratios are 60% for Sporting Goods and 64% for Jewelry and Cosmetics.

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Sporting Goods Cost Jewelry and Cosmetics Retail Cost Retail Net sales $1,000,000 $1,160,000 1,158,000 (20,000) 1,066,000 $741,000 (40,000 (12,000) (2,440) 14,000 39,440 $675,000 Purchase returns (26,000) Purchase discounts (12,360) Freight-in Beginning inventory 47,360 9,000 74,000 62,000