1. Phambroom Company began 2010 with $35,600 in its Inventory account. During the year, it purchased inventory costing $356,800 and sold inventory that had cost $360,000 for $520,000. Based on this information alone, determine (1) the inventory balance as of December 31, 2010, and (2) the amount of gross margin Phambroom would report on its 2010 income statement.
2. Tsang Company purchased $32,000 of inventory on account with payment terms of 2/10, n/30 and freight terms FOB shipping point. Freight costs were $1,100. Tsang obtained a $2,000 purchase allowance because the inventory was damaged upon arrival. Tsang paid for the inventory within the discount period. Based on this information alone, determine the balance in the inventory account.