Reference no: EM132464112

Ayayai Corporation's retail store and warehouse closed for an entire weekend while the year-end inventory was counted. When the count was finished, the controller gathered all the count books and information from the clerical staff, completed the ending inventory calculations, and prepared the following partial income statement for the general manager for Monday morning:

Sales                                      $2,748,000

Beginning inventory                    $640,000

Purchases                                 1,550,000

Total goods available for sale       2,190,000

Less ending inventory                     640,000

Cost of goods sold                       1,550,000

Gross profit                                $1,198,000

• The general manager called the controller into her office after quickly reviewing the preliminary statements. "You've made an error in the inventory," she stated. "My pricing all year has been carefully controlled to provide a gross profit of 36%, and I know the sales are correct."

Question (a) How much should the ending inventory have been?

Question (b) Expected ending inventory ??