The following information was taken from the records of the Prairie Company.

Instructions: 

Using the gross profit method, compute the value to be assigned to the inventory as of September 30, 2002, and prepare an income statement for the 9-month period ending on this date.

Transcribed Image Text:

Jan. 1, 2001-Dec. 31, 2001 Jan. 1, 2002-Sept. 30, 2002 Sales Beginning inventory. Purchases. Freight-in Purchase discounts. Purchase returns... Purchase allowances $2,500,000 420,000 2,152,000 116,000 $1,500,000 785,000 1,061,000 72,000 30,000 15,000 40,000 13,000 8,000 5,000 Ending inventory... 785,000 2 Selling and general expenses. 450,000 320,000