Reference no: EM132514542

Question - The following inventory-related information is for Strawbaby Company, which has a periodic inventory system.

Inventory at the beginning of Year 1 was $100,000. In order to meet the company's profit target for Year 1, the controller (chief accountant) overstated Year 1 ending inventory by $15,000. As a result, reported inventory at the end of Year 1 was $80,000 instead of the correct amount of $65,000. [Note: In Year 2 the company did not-correct this inventory overstatement at the end of Year 1.] - Strawbaby Company is also having difficulty meeting its profit target for Year 2. The target is to report a gross margin (Gross Profit ÷ Sales) of 70% for the year. Remember that Gross Profit is Sales - Cost of Goods Sold. An honest count of the inventory at the end of Year 2 reveals that the cost of inventory on hand is $60,000. What must the reported ending inventory for Year 2 be in order for Strawbaby Company to meet its 70% gross margin target for Year 2? Write the dollar amount of your response (do not write the dollar sign).