Question: Halloween Costumes estimates its ending merchandise inventory by the gross

Halloween Costumes estimates its ending merchandise inventory by the gross profit method. The gross profit has averaged 30% of net sales. The company’s ­merchandise inventory records reveal the following data:
Merchandise Inventory, May 1 .......... $ 270,000
Transactions during May: Purchases ........ 7,520,000
Purchase Discounts ................ 146,000
Purchase Returns and Allowances ......... 34,000
Sales ...................... 8,719,000
Sales Returns and Allowances ........... 27,000

Requirements
1. Estimate the cost of the May 31 merchandise inventory, using the gross profit method.
2. Prepare the May 2015 partial income statement through gross profit for Halloween Costumes.


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  • CreatedJanuary 16, 2015
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