Reasoner Sailing Company sells boats as a supplement to its boat storage operations. Data for its boat sales for August 2016 are given below. The beginning inventory on August 1 was composed of the following items:

___________________________Cost__________Retail

289 Starfish........................$45,000............$57,000

309 Perch............................65,000..............85,000

249 Sea King........................26,000.............30,000

309 Holiday..........................46,000.............60,000

209 Lake King.......................28,000.............34,500

INSTRUCTIONS

Sales during the month were the 309 Holiday and the 209 Lake King, sold at the retail values shown on August 1.

1. What is the best method of valuing the ending inventory?

2. Determine the value of Reasoner Sailing Company's ending inventory of items that were brought over from the beginning inventory using this method. Assume that the company's retail values had not changed.

3. Determine the cost of goods sold during August.

Analyze:

What is the estimated gross profit on sales for August?