Item 2

Time Remaining 58 minutes 14 seconds

00:58:14

Item 2

Time Remaining 58 minutes 14 seconds

00:58:14

Henderson Company uses the gross profit method to estimate ending inventory and cost of goods sold when preparing monthly financial statements required by its bank. Inventory on hand at the end of July was $120,000. The following information for the month of August was available from company records:

Purchases	$	214,000
Freight-in		4,700
Sales		345,000
Sales returns		8,500
Purchases returns		3,800

In addition, the controller is aware of $10,000 of inventory that was stolen during August from one of the companys warehouses. Required: 1. Calculate the estimated inventory at the end of August, assuming a gross profit ratio of 30%. 2. Calculate the estimated inventory at the end of August, assuming a markup on cost of 25%.