Sparrow Company uses the retail inventory method to estimate ending inventory and cost of goods sold. Data for 2016 are as follows:

Cost Reatail

Begining inventory. $90,000. $180,000

Purchases 335,000. 580,000

Freight in 9,000

Purchase returns. 7,000 11,000

Net markups 16,000

Net markdowns 12,000

Normal spoilage 3,000

Abnormal spoliage. 4,800 8,000

Sales 540,000

Sales returns 10,000

The company records sales net of employee discounts. Discounts for 2016 totaled $4,000.

Required:

Estimate Sparrows ending inventory and cost of goods sold for the year using the retail inventory method and the following applications:

1. Average cost

2. Conventional