Final answer:
The student's question focuses on estimating ending inventory using the cost-to-retail method in inventory valuation. Step 2 involves identifying the known quantities. Since actual figures are not provided, the formula and method are explained generally without specific calculations.
Step-by-step explanation:
The question relates to estimating the ending inventory at retail using the cost-to-retail (c to r) method during the inventory valuation process. Step 2 of the method involves identifying the known quantities given or that can be inferred from the problem.
These may include the cost of goods available for sale, beginning inventory at cost and at retail, purchases at cost and at retail, and sales during the period. Once these quantities are correctly identified, further calculations can lead to estimating merchandise balance and current account balance.
As we don't have specific numbers provided in this query, we can't perform actual calculations. However, generally, after collecting the necessary figures, you would use this formula to estimate the ending inventory at retail: ending inventory at cost = (beginning inventory at cost + purchases at cost) - cost of goods sold (COGS). To find the COGS, you might use the sales and the cost-to-retail ratio.