P6-11B Frontenac Books uses the retail inventory method to estimate its monthly ending in¬

ventories. The following information is available for two of its departments at October 31,2008.

Hardcovers _Paperbacks Cost Retail Cost Retail Beginning inventory $ 256,000 $ 400,000 $ 65,000 $ 90,000 Purchases 1,180,000 1,825,000 266,000 380,000 Freight-in 4,000 2,000 Purchase discounts 16,000 4,000 Net sales 1,827,000 385,000 At December 31, Frontenac Books takes a physical inventory at retail. The actual retail values of the inventories in each department are Hardcovers $395,000 and Paperbacks $88,000.

Instructions

(a) Hardcovers cost

(a) Determine the estimated cost of the ending inventory for each department at October 31, ratio 64% 2008, using the retail inventory method.

(b) Compute the ending inventory at cost for each department at December 31, assuming the cost-to-retail ratios for the year are 65% for hardcovers and 70% for paperbacks.