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.

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