Question

In: Accounting

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

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