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Retail inventory method; various cost methods Sparrow Company uses the retail inventory method to estimate ending...

Retail inventory method; various cost methods

Sparrow Company uses the retail inventory method to estimate ending inventory and cost of goods sold. Data for 2016 are as follows:

Cost Retail
Beginning Inventory $90,000 $180,000
Purchases $355,000 $581,000
Freight-in $9,000
Purchase Returns $7,000 $11,000
Net Markups $16,000
Net Markdowns $12,000
Normal Spoilage $3,000
Abnormal Spoilage $4,800 $8,000
Sales $540,000
Sales Returns $10,000

The company records sales net of employee discounts. Discounts for 2016 totaled $4,000.

Required:

Estimate Sparrow’s ending inventory and cost of goods sold for the year using the retail inventory method and the following applications:

1. Average cost

2. Conventional

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