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Question(s) / Instruction(s):

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 2011:                                   Cost                        Retail

  Beginning inventory                     $36,000                 $54,000 

  Purchases                                        198,000                  382,669 

  Freight-in                                           73,174                                  

  Purchase returns                             5,700                      8,550 

  Net markups                                                                       8,800 

  Net markdowns                                                                2,500 

  Normal breakage                                                              6,000 

  Net sales                                                                         267,868 

  Employee discounts                                                        1,700 

 

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 (average, LCM)

2)            Recompute the cost-to-retail percentage using the average cost method and ignoring LCM considerations.

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