Tent Store takes a year-end physical inventory at marked selling prices and uses the retail method to reduce the inventory total to a cost basis for statement purposes. It also uses the retail method to estimate the amount of inventory it should have at the end of a year, and by comparison estimates any inventory shortage due to shoplifting or other cause. At the end of last year, its physical inventory at marked selling prices totaled \(\$ 100,500\), and the following information was available from its records:

\section*{Required}
1. Use the retail method to estimate the store's year-end inventory at cost.
2. Use the retail method to reduce the store's year-end physical inventory to a cost basis.
3. Prepare a schedule showing the inventory shortage at cost and at retail.

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January 1 inventory Purchases Purchases returns Additional markups Markdowns Sales. Sales returns At Cost At Retail $ 58,600 400,240 6,700 $ 86,800 575,500 9,400 12,000 7,400 563,230 8,900