Question: Mark Price Company uses the gross profit method to estimate inventory

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 ....... $ 160,000
Purchases (gross) ...... 640,000
Freight-in .......... 30,000
Sales revenue ....... 1,000,000
Sales returns ........... 70,000
Purchase discounts ....... 12,000

Instructions
(a) Compute the estimated inventory at May 31, assuming that the gross profit is 30% of sales.
(b) Compute the estimated inventory at May 31, assuming that the gross profit is 30% ofcost.

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  • CreatedJune 03, 2013
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