Question

Sparrow Company uses the retail inventory method to estimate ending inventory and cost of goods sold. Data for 2016 are as follows: Cost Retail Beginning inventory $ 84,000 $ 174,000 Purchases 370,000 574,000 Freight-in 8,400 Purchase returns 6,400 10,400 Net markups 15,400 Net markdowns 11,400 Normal spoilage 2,400 Abnormal spoilage 4,467 7,400 Sales 534,000 Sales returns 9,400 The company records sales net of employee discounts. Discounts for 2016 totaled $3,400. Required: 1. Estimate Sparrow’s ending inventory and cost of goods sold for the year using the retail inventory method and the average cost application. (Round your cost-to-retail percentage calculation to 2 decimal places.) 2. Estimate Sparrow’s ending inventory and cost of goods sold for the year using the retail inventory method and the conventional application. (Round your cost-to-retail percentage calculation to 2 decimal places.)



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