Question: 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

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

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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.

How are abnormal shortages handled when using the retail inventory method to estimate ending inventory

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