Question

Estimating inventory using gross profit method the following data are available from a company for the current year. sales revenue $312,000 beginning inventory 41,600 purchases 208,000 required for each separate case a through e, estimate ending inventory. note: carry all decimals in calculations; round the final answer to the nearest dollar.

markup is 33.3% on cost.

Answer 1

To estimate the ending inventory using the gross profit method, calculate the cost of goods sold (COGS) and subtract it from the cost of goods available for sale. The estimated ending inventory is approximately $19,625.

Step-by-step explanation:

To estimate the ending inventory using the gross profit method, you need to calculate the cost of goods sold (COGS) and subtract it from the cost of goods available for sale. Here are the steps:

1. Calculate the cost of goods available for sale: Beginning Inventory + Purchases = $41,600 + $208,000 = $249,600.
2. Calculate the COGS using the gross profit method: Sales Revenue - Gross Profit = $312,000 - (33.3% x $249,600) = $229,974.72.
3. Calculate the estimated ending inventory: Cost of Goods Available for Sale - COGS = $249,600 - $229,974.72 = $19,625.28.

The estimated ending inventory is approximately $19,625.