P8.9 (LO 4) Groupwork (Retail Inventory Method) 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 2025.

Inventory, October 1, 2025 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 2,000 Markdowns (net) 3,600 Normal spoilage and breakage 10,000 Sales 390,000 Instructions

a. Using the conventional retail method, prepare a schedule computing estimated LCNRV inventory for October 31, 2025.

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.