1.SM Supermarket makes use of the retail method in estimating its interim inventory balance. The current reporting period shows the following information:

Particulars Cost Retail Beginning inventory $ 800,000 $ 1,300,000 Purchases 5,900,000 9,500,000 Freight in 240,000 Purchase returns and 460,000 600,000 allowances Purchase discount 300,000 Markups, net 500,000 Markdowns, net 400,000 Sales 9,200,000 Sales returns and 300,000 allowances Sales discount 250,000 Normal inventory loss 400,000Purchases Freight in Year 1 $ 1 200 000 100,000 Year 2 $ 1 500 000 120,000 Purchase returns and allowances 50,000 60,000 Purchase discount Sales 40,000 1,300,000 70,000 1,800,000 Sales returns and allowances 100,000 250,000 Sales discount Cost of sales 120,000 900 000 150,000