ABC Company uses the retail inventory method to value its inventory for financial reporting purposes The company compiled the following cost and retail data for 20X1 Cost Retail Beginning Inventory 7,000,000 10,000,000 Purchases 12,800,000 1500000000 Net Markups 200000000 Net Markdowns 100000000 Net Sales 12,000,000 1) If ABC wishes to approximate the average cost of its inventory, determine the best estimate 2) If ABC wishes to approximate lower of cost or market, determine the best estimate

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Question: ABC Company uses the retail inventory method to value its inventory for financial reporting purposes. The company compiled the following cost and retail data for

ABC Company uses the retail inventory method to value its inventory for financial reporting purposes. The company compiled the following cost and retail data for 20X1.

	Cost	Retail
Beginning Inventory	7,000,000	10,000,000
Purchases	12,800,000	1500000000%
Net Markups		200000000%
Net Markdowns		100000000%
Net Sales		12,000,000

1) If ABC wishes to approximate the average cost of its inventory, determine the best estimate.

2) If ABC wishes to approximate lower-of-cost-or-market, determine the best estimate.

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