Retail Inventory Method

Beginning Inventory
At cost	$100,000
At retail	$125,000
Net purchases
At cost	$300,000
At retail	$360,000
Net markups	$15,000
Net markdowns	$10,000
Net sales at retail	$280,000
Average cost per unit	$8.00
Average selling price per unit	$10.00

Using the gross profit inventory estimation method:

1. Compute gross profit on sales.

2. Compute cost of goods sold.

3. Compute the estimated cost of ending inventory.

Using the conventional (average LCM) inventory estimation method:

1. Compute the ending inventory at retail.

2. Compute cost-to-retail ratio.

3. Compute the estimated cost of ending inventory.