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 $ 80,000 $ 170,000
Purchases 347,000 570,000
Freight-in 8,000
Purchase returns 6,000 10,000
Net markups 15,000
Net markdowns 11,000
Normal spoilage 2,000
Abnormal spoilage 3,705 7,000
Sales 530,000
Sales returns 9,000
The company records sales net of employee discounts. Discounts for 2018 totaled $3,000.
Required:
1. Estimate Sparrow’s ending inventory and cost of goods sold for the year using the retail inventory method and the average cost application.
2. Estimate Sparrow’s 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.)
Average Cost application
Estimated ending inventory at retail
Estimated ending inventory at co
Estimated cost of goods sold
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