Lands End Ltd. has been in operation for several years. At the beginning of 2011, there was $412,400 in beginning inventory. The following information about its inventory is available:

Required:
a. Calculate the gross margin for each year, valuing the ending inventory at acquisition cost. (Use the following relationship: Beginning inventory + Purchases €” Ending inventory = Cost of goods sold.)
b. Calculate the gross margin for each year, valuing the ending inventory at the lower of cost and market value.
c. Compare the gross margin for each year using the two methods, and explain the reason(s) for any differences you observe.
d. Compare the total results (gross margins) over the entire four-year period using the two valuation methods, and explain what you see.

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Ending Inventory Year 2011 2012 2013 2014 Purchases Sales Net Realizable Value $330,000 280,000 250,000 290,000 Cost $2,480,000 $3,470,000 $250,000 2,950,000 240,000 2,110,000 2,940,000 2,640,000 3.730,000 250,000 290,000 190,000