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ABC Company uses the retail inventory method to value its inventory for financial reporting purposes....

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Accounting

ABC Company uses the retail inventory method to value its inventory for financial reporting purposes. The company compiled the following cost and retail data for 20X1.

Cost Retail
Beginning Inventory 7,000,000 10,000,000
Purchases 12,800,000 1500000000%
Net Markups 200000000%
Net Markdowns 100000000%
Net Sales

12,000,000

1) If ABC wishes to approximate the average cost of its inventory, determine the best estimate.

2) If ABC wishes to approximate lower-of-cost-or-market, determine the best estimate.

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