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

Instructions:
Using the gross profit method, compute the value to be assigned to the inventory as of September 30, 2011, and prepare an income statement for the 9-month period ending on thisdate.

Transcribed Image Text:

Jan. 1, 2010-Dec. 31, 2010 Jan. 1, 2011-Sept. 30, 2011 Sales Purchases Freight-In Purchase discounts Purchase returns Purchase allowances Ending Inventory Selling and general expenses $2,500,000 420,000 2.152,000 116,000 30,000 40,000 8,000 785,000 450,000 $1,500,000 785,000 1,061,000 72,000 15,000 13.000 5,000 320,000