Hello,

Can someone please help with this problem and give an explanation for the correct answer? Thank you

Royal Gorge 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 October was $58,800. The following information for the month of November was available from company records:

Purchases	$	113,000
Freight-in		3,300
Sales		195,000
Sales returns		8,000
Purchases returns		5,500

In addition, the controller is aware of $9,500 of inventory that was stolen during November from one of the company's warehouses. Required: 1. Calculate the estimated inventory at the end of November, assuming a gross profit ratio of 40%. 2. Calculate the estimated inventory at the end of November, assuming a markup on cost of 60%.

Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the estimated inventory at the end of November, assuming a gross profit ratio of 40%. $ 58,800 107,500 107, 3,300 169,600 Beginning inventory Plus: Net purchases Freight-in Cost of goods available for sale Less: Cost of goods sold: Net sales Less: Estimated gross profit Estimated cost of goods sold Estimated cost of inventory before theft Less: Stolen inventory Estimated ending inventory $ 187,000 (74.800) 112,200 57,400 9,500 47,900 $ Required 1 Required 2 > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the estimated inventory at the end of November, assuming a markup on cost of 60%. (Do calculations.) $ 58,800 107,500 3,300 169,600 Beginning inventory Plus: Net purchases Freight-in Cost of goods available for sale Less: Cost of goods sold: Net sales Less: Estimated gross profit Estimated cost of goods sold Estimated cost of inventory before theft Less: Stolen inventory Estimated ending inventory $ 187,000 (112,200) 74.800 94,800 9,500 85,300 $