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Erb’s Fine Goods began business on January 1, 2018. During 2018, Erb recorded the following: Purchases...

Erb’s Fine Goods began business on January 1, 2018. During 2018, Erb recorded the following:

Purchases of inventory, at cost: $400,000

Purchases of inventory, at retail value: $800,000

Net Markups $200,000

Net Markdowns $400,000

Sales $500,000

a.Calculate the balance in ending inventory on December 31, 2018 if Erb uses the Retail Inventory –Conventional Methodto value inventory.

b.What amount of gross profit will Erb report on its 2018 Income Statement?

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