Question

Fortune Company had sales during July 20X3 of $29,000. During the month, the company had purchases of $17,000. At July 1, 20X3, the company had inventory of $4,500. Assuming the company has a gross profit percentage of 40%, what is the estimated ending inventory for Fortune Company at July 31, 20X3?

Answer 1

Answer:

$4,100

Explanation:

In this question ,we apply the income statement equation

Opening stock + Purchase + Gross profit = Sales + Closing stock

$4,500 + $17,000 + $11,600 = $29,000 + Closing stock

$33,100 = $29,000 + Closing stock

So, the closing stock would be

= $33,100 - $29,000

= $4,100

The gross profit is computed below:

= Sales × gross profit percentage

= $29,000 × 40%

= $11,600