Question

At May 31, Metlock, Inc. has net sales of $340,000 and cost of goods available for sale of $278,500. Compute the estimated cost of the ending inventory, assuming the gross profit rate is 36%. Estimated cost of ending inventory

Answer 1

$60,900

Step-by-step explanation:

The computation of the closing inventory is shown below:

As we know that

Gross profit = Sales - cost of goods sold

($340,000 × 36%) = $340,000 - cost of goods sold

$122,400 = $340,000 - cost of goods sold

So, the cost of goods sold is

= $217,600

Now the ending inventory is

= Cost of goods sold available for sale - cost of goods sold

= $278,500 - $217,600

= $60,900