The Red Department Store uses the retail inventory method. Information relating to the computation of the inventory at December 31, 2007 is as follows:

Estimated normal shrinkage is 2% of sales.
Required
Prepare a schedule to calculate the estimated ending inventory at the lower of average cost or market at December 31, 2007, using the retail inventory method. Show supporting computations in goodform.

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Cost Retail Cost Retail Inventory at January 1, 2007 Sales Purchases Freight-in $60,000 600,000 Markup cancellations-10,000 25,000 S 32,000 $80,000 Markups 270,000 590,000 Markdowns 7,600 -Markdown cancellations 5,000