The Corral Saddle Company's information about merchandise inventories is as follows:

There was no beginning balance in inventories prior to 2011.
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 Net Realizable Value $70.000 67,000 80,000 31,000 Purchases Sales Cost S140,000 115,000 75,000 175,000 253,000 225,000 80,000 72.000 31,000 100,000 155,000 104,000