Question

Gross Profit MethodBased on the following data, estimate the cost of the ending merchandise inventory:Sales (net) $1,450,000Estimated gross profit rate 42%Beginning merchandise inventory $100,000Purchases (net) 860,000Merchandise available for sale $960,000Cost of Ending Merchandise InventoryMerchandise available for sale $Less cost of merchandise sold Estimated ending merchandise inventory $

Answer 1

Answer:

Ending inventory= $119,000

Explanation:

Giving the following information:

Sales (net) $1,450,000

Estimated gross profit rate of 42%

Beginning merchandise inventory $100,000

Purchases (net) 860,000

Merchandise available for sale $960,000

Cost of goods sold= 1,450,000*0.58= 841,000

Ending inventory= 960,000 - 841,000= 119,000