Mark Price Company uses the gross profit method to estimate inventory for monthl

Question

Mark Price Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May. Inventory, May 1 $ 178,800 Purchases (gross) 650,500 Freight-in 30,400 Sales revenue 1,073,200 Sales returns 78,100 Purchase discounts 12,530 (a) Compute the estimated inventory at May 31, assuming that the gross profit is 30% of sales. The estimated inventory at May 31 $ (b) Compute the estimated inventory at May 31, assuming that the gross profit is 30% of cost. (Round percentage of sales to 2 decimal places, e.g. 78.74% and final answer to 0 decimal places, e.g. 6,225.) The estimated inventory at May 31 $

Explanation / Answer

openning inventory 178800 purchases 650500 less discounts 12530 637970 freight 30400 30400 expected cost of goods available 847170 cost of goods sold sales 1073200 sales return 78100 net sales 995100 gross profit rate 30% 298530 cost of goods sold 696570 cost of closing inventory 150600

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