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Anthony Thomas Candies (ATC) reported the following financial data for 2018 and 2017:

	2018				2017
Sales	$	305,000			$	301,000
Sales returns and allowances		7,700				4,300
Net sales	$	297,300			$	296,700
Cost of goods sold:
Inventory, January 1		54,000				33,000
Net purchases		140,000				128,000
Goods available for sale		194,000				161,000
Inventory, December 31		68,000				54,000
Cost of goods sold		126,000				107,000
Gross profit	$	171,300			$	189,700

ATC's gross profit ratio (rounded) in 2018 is: (Round your answer to one decimal place e.g., 0.123 as 12.3%.)

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On January 1, 2018, Badger Inc. adopted the dollar-value LIFO method. The inventory cost on this date was $101,200. The ending inventory, valued at year-end costs, and the relative cost index for each of the next three years is below:

Year-end	Ending inventory at year-end costs				Cost Index
2018	$	129,780				1.05
2019		148,280				1.10
2020		158,640				1.20

What inventory balance would Badger report on its 12/31/2020 balance sheet?

Answer 1

Answer to Question 1:

Gross Profit Ratio = Gross Profit / Net Sales

Gross Profit Ratio = $171,300 / $297,300

Gross Profit Ratio = 0.5762 or 57.62%

Answer to Question 2:
Computation of inventory at base year prices and change from prior year - Badger Inc.
Date	Inventory at end of year prices	Price index (Percentage)	Inventory at base year prices	Change from Prior Years
01-Jan-18	$101,200.00	100	$101,200.00	$0.00
31-Dec-18	$129,780.00	105	$123,600.00	$22,400.00
31-Dec-19	$148,280.00	110	$134,800.00	$11,200.00
31-Dec-20	$158,640.00	120	$132,200.00	-$2,600.00

Computation of dollar value inventory - LIFO
Particulars	Amount
December 31, 2020:
$101,200*$1	$101,200
$22,400*1.05	$23,520
$11,200*1.10	$12,320
-$2,600*1.20	-$3,120
December 31, 2020:	$1,33,920