Question
Sparrow Company uses the retail inventory method to estimate ending inventory and cost of goods sold. Data for 2018 are as follows: Cost Retail Beginning
Sparrow Company uses the retail inventory method to estimate ending inventory and cost of goods sold. Data for 2018 are as follows: Cost Retail Beginning inventory $ 93,000 $ 183,000 Purchases 362,000 583,000 Freight-in 9,300 Purchase returns 7,300 11,300 Net markups 16,300 Net markdowns 12,300 Normal spoilage 3,300 Abnormal spoilage 4,884 8,300 Sales 543,000 Sales returns 10,300 The company records sales net of employee discounts. Discounts for 2018 totaled $4,300. Required: 1. Estimate Sparrows ending inventory and cost of goods sold for the year using the retail inventory method and the average cost application. 2. Estimate Sparrows ending inventory and cost of goods sold for the year using the retail inventory method and the conventional application.
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