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ahrayia [7]
3 years ago
5

Landis Company is preparing its financial statements. Gross margin is normally 40% of sales. Information taken from the company'

s records revealed sales of $25,000; beginning inventory of $2,500 and purchases of $17,500. What is the estimated amount of ending inventory at the end of the period
Business
1 answer:
tatiyna3 years ago
5 0

Answer:

$5,000= ending inventory

Explanation:

Giving the following information:

Gross margin is normally 40% of sales.

Sales= $25,000

beginning inventory= $2,500

purchases= $17,500

First, we need to determine the cost of goods sold:

COGS= 25,000*0.6= 15,000

Now, using the following formula, we can calculate the ending inventory:

COGS= beginning inventory + cost of goods purchased - ending inventory

15,000= 2,500 + 17,500 - ending inventory

5,000= ending inventory

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