Presented below is information related to Luzon SA.

Instructions
a. Compute the ending inventory at retail.
b. Compute a cost-to-retail percentage (round to two decimals) under the following conditions.
1. Excluding both markups and markdowns.
2. Excluding markups but including markdowns.
3. Excluding markdowns but including markups.
4. Including both markdowns and markups.
c. Which of the methods in (b) above (1, 2, 3, or 4) does the following?
1. Provides the most conservative estimate of ending inventory.
2. Provides an approximation of LCNRV.
3. Is used in the conventional retail method.
d. Compute ending inventory at LCNRV (round to nearest dollar).
e. Compute cost of goods sold based on (d).
f. Compute gross margin based on (d).

Transcribed Image Text:

Cost Retail Beginning inventory R$ 58,000 R$100,000 Purchases (net) 200,000 122,000 Net markups 20,000 Net markdowns 30,000 186,000 Sales