Chapter 10, Problem 10.14P

Basic Retail Inventory Method and Conventional Retail Inventory Methods. The Johnny Fruit Company provided the following data related to its inventory at the end of the current year. Round percentages to two decimal places.

Description	Cost	Retail
Beginning inventory	$ 17,800	$28,000
Purchases	123,400	213,000
Additional markups		24,000
Markup cancellations		3,200
Markdowns		19,200
Markdown cancellations		2,200
Sales		200,000

Required

a. What are Johnny Fruit’s ending inventory and cost of goods sold under the conventional retail method?

b. What are Johnny Fruit’s ending inventory and cost of goods sold under the basic retail method?

c. Which method provides the lower ending inventory value consistent with the lower-of-cost-or-market method?