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Question - The local supermarket, which uses the retail inventory method is suspicious that employees are doing some major shoplifting. The store took a physical inventory at the end of the year which totaled $160,000 at retail. The store recorded the following for the year:
Beginning inventory: cost $70,000, retail $120,000
Net Purchases: cost $30,000 retail $580,000
Net Markups: $50,000
Net Markdowns: $30,000
Gross Sales (at retail) $550,000
Sales Returns (at retail) $10,000
Objective: Determine the estimated loss (at cost) due to shoplifting using either the conventional method or the one that approximates lower of cost or market.
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