E9.14 (LO 4) (Gross Profit Method) Mark Price Company uses the gross profit method to...
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Accounting
E9.14 (LO 4) (Gross Profit Method) Mark Price Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May.
| Inventory, May 1 | $160,000 |
| Purchases (gross) | 640,000 |
| Freight-in | 30,000 |
| Sales revenue | 1,000,000 |
| Sales returns | 70,000 |
| Purchase discounts | 12,000 |
Instructions
a. Compute the estimated inventory at May 31, assuming that the gross profit is 30% of sales.
b. Compute the estimated inventory at May 31, assuming that the gross profit is 30% of cost.
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