Fuque Inc. uses the retail inventory method to estimate ending inventory for its monthly financial statements. The following data pertain to a single department for the month of October 2021. Inventory, October 1, 2021   
 At cost $ 52,000
 At retail 78,000
Purchases (exclusive of freight and returns)
 At cost 272,000
 At retail 423,000
Freight-in 16,600
Purchase returns
 At cost 5,600
 At retail 8,000
Markups 9,000
Markup cancellations 2,000
Markdowns (net) 3,600
Normal spoilage and breakage 10,000
Sales revenue 390,000
Instructions:
a. Using the conventional retail method, prepare a schedule computing estimated lower-of-cost-or-market inventory for October 31, 2021.
b. A department store using the conventional retail inventory method estimates the cost of its ending inventory as $60,000. An accurate physical count reveals only $47,000 of inventory at lower-of-cost-or-market. List the factors that may have caused the difference between the computed inventory and the physical count.