(Retail Inventory Method)

Presented below is information related to McKenna Company.

Cost Retail
Beginning inventory $58,000 $100,000
Purchases (net) 122,000 200,000
Net markups 20,000
Net markdowns 30,000
Sales 186,000


(a) Compute the ending inventory at retail.

$


(b) Compute a cost-to-retail percentage (Round to two decimals, e.g. 12.25.) under the following conditions.


Excluding both markups and markdowns.
%


Excluding markups but including markdowns.
%


Excluding markdowns but including markups.
%


Including both markdowns and markups.
%

(c) Which of the methods in (b) above (1, 2, 3, or 4) does the following?


Provides the most conservative estimate of ending inventory.
Method 3Method 2Method 4Method 1


Provides an approximation of lower-of-cost-or-market.
Method 3Method 4Method 1Method 2


Is used in the conventional retail method.
Method 1Method 2Method 4Method 3

(d) Compute ending inventory at lower-of-cost-or-market. (Round to 0 decimal places, e.g. 25,250.)

$


(e) Compute cost of goods sold based on (d).

$


(f) Compute gross margin based on (d).

$