The following information was taken from the accounting records of Chicoutimi Ltée and Jonquière Ltée at December 31, 2016. The two companies are competitors.

Required:
a. Calculate the gross margin, gross margin ratio, and inventory turnover ratio at December 31, 2016, for:
i. Chicoutimi Ltée.
ii. Jonquière Ltée.
b. During the December 20, 2016, inventory count at Chicoutimi Ltée, $75,000 of inventory shrinkage was identified. It had not been recorded in the inventory account.
i. Prepare the entry to record the inventory shrinkage of $75,000.
ii. Recalculate Chicoutimi€™s gross margin, gross margin ratio, and inventory turnover ratio after the adjusting journal entry is made.
iii. Describe what happened to Chicoutimi€™s gross margin ratio and inventory turnover ratio after adjusting for the inventory shrinkage.
c. Which company do you think is better at managing inventory? Explain your answer.

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Chicoutimi Ltée 395.000 425,000 2.460,000 6.150,000 Jonquière Ltée Ending inventory. Dec. 31, 2015 Ending inventory, Dec. 31, 2016 Cost of goods sold, 2016 Sales for 2016 S 150,000 200,000 962,500 2.406,250