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Lacy's Linen Mart uses the average cost retail method to estimate inventories. Data for the first six months of 2021 include: beginning inventory at cost and retail were $64,500 and $123,000, net purchases at cost and retail were $315,000 and $483,000, and sales during the first six months totaled $493,000. The estimated inventory at June 30, 2021, would be:

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  1. 8 May, 11:46
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    Best estimate for inventory = $70,764.85

    Explanation:

    The closing inventory value at retail

    = (Opening inventory + Purchases - sales) all in retail prices

    = $123,000 + $483,000 - 493,000.

    = 113000

    Closing inventory value at cost

    =113,000 * (64,500 + 315,000) / (123,000 + $483,000)

    =70,764.85

    Best estimate for inventory = $70,764.85
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