Reference no: EM132778959

Rosel Company used the retail inventory method to approximate the ending inventory. The following information is available for the current year:

                                                        Cost                  Retail

Beginning Inventory                650,000              1,200,000

Purchases                           9,000,000              14,700,000

Freight In                                200,000

Purchase Returns                      300,000             500,000

Purchase Allowances                 150,000

Departmental transfer in             200,000             300,000

Net Markups          300,000

Net Markdowns    1,000,000

Sales                   9,500,000

Sales Discounts        100,000

Employee Discounts     500,000

Estimated normal shoplifting losses  600,000

Estimated normal shrinkage      400,000

Problem 1: What is the estimated cost of ending inventory using the conservative approach ?

a. 2,400,000

b. 2,460,000

c. 3,060,000

d. 2,700,000

Problem 2: What is the estimated cost of ending inventory using the average cost approach ?

a. 2,560,000

b. 2,624,000

c. 3,264,000

d. 2,880,000