Reference no: EM132772717

Question - Rosel Company used the retail inventory method to approximate the ending inventory. The following information is available for the current year:

Cost Retail

Beginning Inventory 650,000 1,200,000

Purchases 9,000,000 14,700,000

Freight In 200,000

Purchase Returns 300,000 500,000

Purchase Allowances 150,000

Departmental transfer in 200,000 300,000

Net Markups 300,000

Net Markdowns 1,000,000

Sales 9,500,000

Sales Discounts 100,000

Employee Discounts 500,000

Estimated normal shoplifting losses 600,000

Estimated normal shrinkage 400,000

1. What is the estimated cost of ending inventory using the conservative approach?

a. 2,400,000

b. 2,460,000

c. 3,060,000

d. 2,700,000

2. What is the estimated cost of ending inventory using the average cost approach?

a. 2,560,000

b. 2,624,000

c. 3,264,000

d. 2,880,000