Irene's Dress Shop had net retail sales of $500,000 during the current year. The follow- ing additional information was obtained from the 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 inventor}- on hand of $36,000 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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Beginning inventory Net purchases (excluding freight in) Freight in At Cost At Retail $ 80,000 $120,000 280,000 440,000 20,800