Fuque Ltd. 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 2022.

Instructions

a. Using the conventional retail method, prepare a schedule computing estimated LCNRV inventory for October 31, 2022.

b. A department store using the conventional retail inventory method estimates the cost of its ending inventory as £60,000. An accurate physical count reveals only £47,000 of inventory at LCNRV. List the factors that may have caused the difference between the computed inventory and the physical count.

Transcribed Image Text:

Inventory, October 1, 2022 At cost £ 52,000 At retail 78,000 Purchases (exclusive of freight and returns) At cost 272,000 At retail 423,000 Freight-in 16,600 Purchase returns At cost 5,600 At retail 8,000 Markups 9,000 Markup cancellations Markdowns (net) 2,000 3,600 Normal spoilage and breakage 10,000 Sales 390,000