E8.20 (LO 4) (Retail Inventory Method) Presented below is information related to Luzon SA.

Cost Retail Beginning inventory R$ 58,000 R$100,000 Purchases (net) 122,000 200,000 Net markups 20,000 Net markdowns 30,000 Sales 186,000 Instructions

a. Compute the ending inventory at retail.

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

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 LCNRV.

3. Is used in the conventional retail method.

d. Compute ending inventory at LCNRV. (Round to nearest dollar.)

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

f. Compute gross margin based on (d).