Prepare a report to the president explaining the retail method of pricing inventories. Your report

should include the following points:

$1.$ Description and accounting features of the method.

$2.$ The conditions that may distort the results under the method.

$3.$ A comparison of the advantages of using the retail method with those of using cost methods

of inventory pricing.

$4.$ The accounting theory underlying the treatment of net markdowns and net markups under the

method.