Problem 16-60 (LO. 6)

Grouse Company is a furniture retailer whose average annual gross receipts for the three preceding years exceeded $26,000,000. In the current tax year, the company purchased merchandise with an invoice price of $15,000,000, less a 2% discount for early payment. However, the company had to borrow on a bank line of credit and paid $150,000 interest to take advantage of the discount for early payment.

Freight on the merchandise purchased totaled $360,000. For September, Grouse agreed to pay the customer's freight on goods sold. The total cost of this freight-out was $70,000. The company has three stores and operates a warehouse where it stores goods. The cost of operating the warehouse was $240,000. The $240,000 includes labor, depreciation, taxes, and insurance on the building. The cost of the purchasing operations totaled $420,000.

The jurisdiction where the company operates imposes a tax on inventories on hand as of January 1. The inventory tax for this year is $24,000. The invoice cost of goods on hand at the end of the year is $3,000,000.

a. Grouse's total cost of goods purchased is $fill in the blank 1.

b. Grouse's total cost of ending inventory using the FIFO method is $fill in the blank 2.