Warmer's Dress Shop had net retail sales of $250,000 during the current year. The following additional information was obtained from the company's accounting records:
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At Cost
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At retail
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Beginning inventory
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$ 40,000
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$ 60,000
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Net purchases (excluding freight-in)
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140,000
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220,000
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Freight-in
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10,400
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1. Using the retail method, estimate the company's ending inventory at cost.
2. Assume that a physical inventory taken at year end revealed an inventory on hand of $18,000 at retail value. What is the estimated amount of inventory shrinkage (loss due to theft, damage, etc.) at cost using the retail method?