(Retail Inventory Method) The records for the Clothing Department of Sharapova’s Discount Store are summarized below for the month of January.
Inventory, January 1: at retail $25,000; at cost $17,000
Purchases in January: at retail $137,000; at cost $82,500
Freight in: $7,000
Purchase returns: at retail $3,000; at cost $2,300
Transfers in from suburban branch: at retail $13,000; at cost $9,200
Net markups: $8,000
Net markdowns: $4,000
Inventory losses due to normal breakage, etc.: at retail $400
Sales at retail: $95,000
Sales returns: $2,400
Instructions
(a) Compute the inventory for this department as of January 31, at retail prices.
(b) Compute the ending inventory using lower of average cost or market.