Tate Tasers Inc is preparing interim financial statements for the
Tate Tasers Inc. is preparing interim financial statements for the quarter ending 31 March 20X1 and needs to estimate the value of inventory on hand at the end of the quarter. Physical inventory counts are taken only at the end of the fiscal year. The following information is available:
Beginning inventory.............. $ 400,000
Purchases ................... 900,000
Sales ..................... 1,500,000
Sales returns (to stock) ............. 40,000
In- bound shipping on purchases.......... 26,000
Out- bound shipping to customers.......... 42,000
HST on purchases................ 117,000
HST on net sales................. 190,000
Import duties ................. 40,000
Inventory storage costs .............. 6,000

The average gross margin ratio is 30%. Required: Using the gross margin method, determine the cost of ending inventory and the cost of sales for the quarter.

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