Question

Using the gross profit method, find the estimated ending inventory using the following data:

January 1 inventory: 320 serving trays purchased at $1.50 per unit cost

April 1 inventory: 300 serving trays purchased at $1.10 per unit cost

July 1 inventory: 100 serving trays purchased at $2.00 per unit cost

The net sales value of serving trays is $998 and the gross profit on sales is 20%

A. $211.60
B. $330.40
C. $1010.50
D. $485.50​

Answer 1

Answer:

$211.60

Step-by-step explanation:

1. Calculate goods available for sale. Beginning inv. + Net purchases.

BI (320 * $1.50) + Net Purchases (300 * $1.10) + (100 * $2.00)

$480.00 +$530.00 = $1,010.00

2. Find Estimated Cost of Goods Sold.

ECGS = $998.00(1 * 0.20) = $998.00 - $199.60) = $798.40

3. Calculate the estimate of ending inventory by subtracting ECGS from Goods available for sale.

$1,010.00 - $798.40 = $211.60

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