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Martinez Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented...

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Question

Accounting

Martinez 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 $ 175,600
Purchases (gross) 617,400
Freight-in 31,700
Sales revenue 973,200
Sales returns 68,100
Purchase discounts 12,900

Part 1

Correct answer iconYour answer is correct.

Compute the estimated inventory at May 31, assuming that the gross profit is 20% of net sales.

The estimated inventory at May 31

$enter the dollar amount of the estimated inventory at May 31

$87,720 (I got correct, but not part 2)

Part 2

Incorrect answer iconYour answer is incorrect.

Compute the estimated inventory at May 31, assuming that the gross profit is 20% of cost. (Round percentage of sales to 2 decimal places, e.g. 78.74% and final answer to 0 decimal places, e.g. 6,225.)

The estimated inventory at May 31

$enter the dollar amount of the estimated inventory at May 31

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