Ernst Equipment Co. wants to prepare interim financial statements for the first quarter. The company wishes to

Question:

Ernst Equipment Co. wants to prepare interim financial statements for the first quarter. The company wishes to avoid making a physical count of inventory. Ernst’s gross profit rate averages 30%. The following information for the first quarter is available from its records.

January 1 beginning inventory . . . . . . . . . $ 752,880

Cost of goods purchased . . . . . . . . . . . . . 2,159,630

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,710,250

Sales returns . . . . . . . . . . . . . . . . . . . . . . . . . . 74,200

Required

Use the gross profit method to estimate the company’s first quarter ending inventory.

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =... Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...