A lquist Company uses the retail method to estimate its ending inventory. Selected information about its year 2016 operations is as follows: a. January 1, 2016, beginning inventory had a cost of $100,000 and a retail value of $150,000.
b. Purchases during 2016 cost $1,387,500 with an original retail value of $2,000,000.
c. Freight costs were $10,000 for incoming merchandise.
d. Net additional markups were $300,000 and net markdowns were $150,000.
e. Based on prior experience, shrinkage due to shoplifting was estimated to be $15,000 of retail value.
f. Merchandise is sold to employees at a 20% of selling price discount. Employee sales are recorded in a separate account at the net selling price. The balance in this account at the end of 2016 is $250,000.
g. Sales to customers totaled $1,750,000 for the year.
Required:
1. Estimate ending inventory and cost of goods sold using the conventional retail method.
2. Estimate ending inventory and cost of goods sold using the LIFO retail method. (Assume stable prices.)