Retail Inventory Method Presented below is information related to McKenna Company.

(a) Compute the ending inventory at retail.

(b) Compute a cost-to-retail percentage (round to two decimals) under the following conditions.

(1) Excluding both markups and markdowns.

(2) Excluding markups but including markdowns.

(3) Excluding markdowns but including markups.

(4) Including both markdowns and markups.

(c) Which of the methods in (b) above (1, 2, 3, or 4) does the following?

(1) Provides the most conservative estimate of ending inventory.

(2) Provides an approximation of lower-of-cost-or-market.

(3) Is used in the conventional retail method.

(d) Compute ending inventory at lower-of-cost-or-market (round to nearest dollar).

(e) Compute cost of goods sold based on (d).

(f) Compute gross margin based on(d).

Retail Cost Beginning inventory Purchases (net) $100,000 122,000 20,000 30,000 186,000 Net markups Net markdowns Sales