Question

You are auditing the records of Xiao Yu Corporation. The company took a physical inventory under your observation. However, the valuations have not been completed.
The records of the company provide the following data: sales, $ 800,000 (gross); returned sales, $ 35,000 ( returned to stock); purchases ( gross), $ 500,000; beginning inventory, $ 320,000; freight- in, $ 16,000; and purchase returns and allowances, $ 14,000.
The gross margin last period was 25% of net sales; you anticipate that it will average 30% for the year under audit.

Required:
Estimate the cost of the ending inventory and the cost of sales using the gross margin method. Show all calculations.



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  • CreatedFebruary 17, 2015
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