Question
LeMay Department Store uses the retail inventory method to estimate ending inventory for its monthly financial statements. The following data pertain to one of its
LeMay Department Store uses the retail inventory method to estimate ending inventory for its monthly financial
statements. The following data pertain to one of its largest departments for the month of March 2018:
Cost
Retail
Beginning inventory
Purchases
$ 40.000
$ 60,000
400,000
207,000
Freight-in
Purchase returns
14,488
4,000
6,000
Net markups
Net markdowns
Normal breakage
5,800
3.500
6.000
Net sales
280.000
Employee discounts
1,800
Sales are recorded net of employee discounts.
Required:
1. Compute estimated ending inventory and cost of goods sold for March applying the conventional retail
method.
2. Recompute the cost-to-retail percentage using the average cost method.
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