Question
South-Western Federal Taxation: Individual Income Taxes Chapter 18, Problem 63 Grouse Company is a furniture retailer whose average annual gross receipts for the three preceding
South-Western Federal Taxation: Individual Income Taxes
Chapter 18, Problem 63
Grouse Company is a furniture retailer whose average annual gross receipts for the three preceding years exceeded $10 million. In the current tax year, the company purchased merchandies with an invoice price of $15 million, 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 $240,00. The $240,000 includes labor, depreciation, taxes, and insurance 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 sold on hand at the end of the year is $3 million. Compute Grouse's ending inventory using the FIFO method.
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