By the conventional retail method, we estimate average cost at lower of cost or market. Average cost is estimated by including beginning inventory in the calculation of the cost$-$to$-$retail percentage. The lower of average cost or market is estimated by excluding markdowns from the calculation. Markdowns are subtracted in the retail column after the percentage is calculated.

The Retail Inventory Method: The LIFO Retail Method

Knowledge Check $01$

A company uses the retail method to estimate inventories. The following information is for the first six months of the current year: beginning inventory at cost and retail were $$70,000$ and $$100,000$ respectively, net purchases at cost and retail were $$270,000$ and $$360,000,$ respectively, and sales during the first six months totaled $$320,000.$ What is the estimated cost of goods sold at the end of the six$-$month period using the LIFO retail method?