1) The following data concerning the retail inventory method are taken from the financial records of Welch Company.

		Cost		Retail
Beginning inventory		$ 196,000		$ 280,000
Purchases		896,000		1,280,000
Freight-in		24,000
Net markups				80,000
Net markdowns				56,000
Sales				1,344,000

If the foregoing figures are verified and a count of the ending inventory reveals that merchandise actually on hand amounts to $144,000 at retail, the business has

realized a windfall gain.

sustained a loss.

no gain or loss as there is close coincidence of the inventories.

none of these answer choices are correct.

2) A machine cost $1213000, has annual depreciation of $201000, and has accumulated depreciation of $947000 on December 31, 2017. On April 1, 2018, when the machine has a fair value of $276000, it is exchanged for a machine with a fair value of $1352000 and the proper amount of cash is paid. The exchange had commercial substance. The gain to be recorded on the exchange is

$60250

$65000

$139000

$0