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Problem 9-6 Retail inventory method; various cost methods [LO9-3, 9-4]

Sparrow Company uses the retail inventory method to estimate ending inventory and cost of goods sold. Data for 2018 are as follows:

	Cost			Retail
Beginning inventory	$	90,000		$	180,000
Purchases		355,000			580,000
Freight-in		9,000
Purchase returns		7,000			11,000
Net markups					16,000
Net markdowns					12,000
Normal spoilage					3,000
Abnormal spoilage		4,800			8,000
Sales					540,000
Sales returns					10,000

The company records sales net of employee discounts. Discounts for 2018 totaled $4,000. Required: 1. Estimate Sparrows ending inventory and cost of goods sold for the year using the retail inventory method and the average cost application. 2. Estimate Sparrows ending inventory and cost of goods sold for the year using the retail inventory method and the conventional application. (For all requirements, round Cost-to-retail percentage to two decimal places and final answers to whole dollars.)

Answer is complete but not entirely correct. Average Conventional cost application application Estimated ending inventory at retail Estimated ending inventory at 208,000 208,000 123,469 123,460 cost Estimated cost of goods sold 314,585 314,585