Presented below is information related to Pronghorn Company. Cost Retail Beginning inventory $ 61,600 $107,300 Purchases...

Presented below is information related to Pronghorn Company.

	Cost	Retail
Beginning inventory	$ 61,600	$107,300
Purchases (net)	120,170	180,700
Net markups		10,325
Net markdowns		26,679
Sales revenue		187,090

a) Compute ending inventory at lower-of-cost-or-market.

b) Compute cost of goods sold based on (a)

c) Compute gross margin based on (a)

Solutions

Expert Solution

a)		Cost	Retail
	Beginning inventory	$ 61,600	$ 107,300
	Purchases (net)	$ 120,170	$ 180,700
	Net markups		$ 10,325
		$ 120,170	$ 298,325
	Net markdowns		$ 26,679
		$ 120,170	$ 271,646
	Sales revenue		$ 187,090
	Ending inventory at retail		$ 84,556


	Ending inventory=84556*120170/298325=34,060.49

b)	Cost of goods sold=120170-34060.49= $ 86109.51

c)	Gross profit=187090-86109.51=$ 100,980.49

ekkarill92 answered 1 year ago

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