The records of Alaina Co. provide the following information for the year ended December 31:

At Cost At Retail

January 1 beginning inventory . . . . . . . $ 81,670 $114,610

Cost of goods purchased . . . . . . . . . . . 492,250 751,730

Sales . . . . . . . . . . . . . . . . . . . . . . . . . 786,120

Sales returns . . . . . . . . . . . . . . . . . . . . 4,480

Required

1. Use the retail inventory method to estimate the company’s year-end inventory.

2. A year-end physical inventory at retail prices yields a total inventory of $78,550. Prepare a calculation showing the company’s loss from shrinkage at cost and at retail.

Check: (1) inventory $ 55,902 cost (2) Inventory shortage at cost $ 4,059