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LeMay Department Store uses the retail inventory method to estimate ending inventory for its monthly...

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Question

Accounting

LeMay Department Store uses the retail inventory method to estimate ending inventory for its monthly financial

statements. The following data pertain to one of its largest departments for the month of March 2018:

Cost

Retail

Beginning inventory

Purchases

$ 40.000

$ 60,000

400,000

207,000

Freight-in

Purchase returns

14,488

4,000

6,000

Net markups

Net markdowns

Normal breakage

5,800

3.500

6.000

Net sales

280.000

Employee discounts

1,800

Sales are recorded net of employee discounts.

Required:

1. Compute estimated ending inventory and cost of goods sold for March applying the conventional retail

method.

2. Recompute the cost-to-retail percentage using the average cost method.

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