Question

Garden World uses the retail method to estimate its monthly cost of goods sold and month-end inventory. At May 31, the accounting records indicate the cost of goods available for sale during the month (beginning inventory plus purchases) totaled $580,000. These goods had been priced for resale at $1,020,000. Sales in May totaled $400,000. The estimated inventory at May 31 is:

Answer 1

Answer:

The estimated inventory at May 31 is $352,549

Explanation:

In order to calculate the estimated inventory at May 31 we would have to calculate the following formula:

Estimated closing inventory=(resale of goods- sales in may)*(beginning inventory plus purchases/resale of goods

Estimated closing inventory=($1,020,000-$400,000)*($580,000)/$1,020,000)

Estimated closing inventory =($620,000*$580,000)/$1,020,000

Estimated closing inventory =$352,549

The estimated inventory at May 31 is $352,549