The records of Diskount Depart-ment Stores Inc. provided the following data for 20X5:

Sales ( gross)........... $ 800,000

Sales returns........... 2,000

Additional markups......... 9,000

Additional markup cancellations ...5,000

Markdowns ...........7,000

Purchases: At retail......... 850,000

At cost ..............459,500

Purchase returns: At retail...... 4,000

At cost .............2,200

Freight on purchases .........7,000

Beginning inventory: At retail .....80,000

At cost ...............45,000

Markdown cancellations .......3,000

1. Estimate the valuation of the ending inventory and cost of goods sold using the gross margin method. Last year’s gross margin percentage was 51%.

2. Estimate the valuation of the ending inventory and cost of goods sold using the retail sales method, which approximates lower- of- cost- or- NRV valuation.

3. Which method s likely to be more accurate? Comment.