Phillips Supply uses a periodic inventory system but needs to determine the approximate amount of inventory at the end of each month without taking a physical inventory. Phillips has provided the following inventory data:

a. Estimate the cost of goods sold and the cost of the July 31 ending inventory using the retail method of evaluation.

b. Was the cost of Phillips’s inventory, as a percentage of retail selling prices, higher or lower in July than it was in June? Explain.

Retail Selling Price Cost Price Inventory of merchandise, June 30. Purchases during July Goods available for sale during July. Net sales during July $300,000 $500,000 400,000 222,000 $522,000 $900,000 $600,000