P8.7 (LO 4) (Retail Inventory Method) The records for the Clothing Department of Wei’s Discount Store are summarized below for the month of January (HK$ in thousands).

Inventory, January 1: at retail HK$25,000; at cost HK$17,000 Purchases in January: at retail HK$137,000; at cost HK$82,500 Freight-in: HK$7,000 Purchase returns: at retail HK$3,000; at cost HK$2,300 Transfers-in from suburban branch: at retail HK$13,000; at cost HK$9,200 Net markups: HK$8,000 Net markdowns: HK$4,000 Inventory losses due to normal breakage, etc.: at retail HK$400 Sales at retail: HK$95,000 Sales returns: HK$2,400 Instructions

a. Compute the inventory for this department as of January 31, at retail prices.

b. Compute the ending inventory using lower-of-average-cost-or-net realizable value.