Escriba Corp. uses the conventional retail method to estimate ending inventories. Here is the data from Escribas records for the year ended December 31, 2020:

	Cost	Retail
Inventory, January 1	$ 88,000	$ 132,000
Purchases	163,000	240,000
Net markups		10,100
Net markdowns		9,200
Normal spoilage		43,200
Net sales		213,000

4a. Estimate the cost of ending inventory applying the conventional retail method.

4b. What if the physical count of ending inventory at retail totaled to $101,500 of goods on hand? Your boss asks you to explain what could have happened and how you would proceed to develop a dollar amount for ending inventory in the financial statements.