Joan’s Dress Shop had net retail sales of $250,000 during the current year. The following additional information was obtained from the company’s accounting records:

1. Using the retail method, estimate the company’s ending inventory at cost.

2. Assume that a physical inventory taken at year-end revealed an inventory on hand of $18,000 at retail value. What is the estimated amount of inventory shrinkage (loss due to theft, damage, etc.) at cost using the retail method?

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At Cost 40,000 140,000 10,400 At Retail Beginning inventory Net purchases (excluding freight-in) Freight-in s 60,000 220,000