Grand Department Store, Inc., uses the retail inventory method to estimate ending inventory for its monthly financial statements. The following data pertain to a single department for the month of October 2011:

Required:
1. Using the conventional retail method, prepare a schedule computing estimated lower-of-cost-or-market inventory for October 31, 2011.
2. A department store using the conventional retail inventory method estimates the cost of its ending inventory as $29,000. An accurate physical count reveals only $22,000 of inventory at lower of cost or market. List the factors that may have caused the difference between computed inventory and the physicalcount.

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Inventory, October 1, 2011 At cost At retail Purchases (exclusive of freight and returns) At cost At retail Freight-in Purchase returns At cost At retail Additional markups Markup cancellations Markdowns (net) Normal spoilage and breakage Sales 20,000 30,000 1,00,151 1,46,495 5,100 2,100 2,800 2,500 265 800 4,500 1,35,730