Answer:
Pharoah's inventory at December 31, 2020 was $81,120. The right answer is a.
Explanation:
In order to calculate Pharoah's inventory at December 31, 2020 we would have to calculate the following formula:
Ending inventory at cost=Ending inventory at retail*Cost to Retail ratio
Cost to Retail ratio=$772,000 ÷ $1,184,000
Cost to Retail ratio= 0.65
Ending inventory at retail=($1,184,000 – $9,200 – $1,050,000)
Ending inventory at retail=$124,800
Therefore, Ending inventory at cost=$124,800× 0.65
Ending inventory at cost=$81,120
Pharoah's inventory at December 31, 2020 was $81,120
