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Royal Gorge Company uses the gross profit method to estimate ending inventory and cost of...

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Accounting

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Royal Gorge Company uses the gross profit method to estimate ending inventory and cost of goods sold when preparing monthly financlal statements required by its bank. Inventory on hand at the end of January was $57,800. The following information for the month of February was available from company records: . Purchases of $120,000 Freight-in of $2,700 - Sales of $180,000 - Sales Returns of $4,400 . Purchase Returns of $3,400 In addition, the controller is aware of $8,100 of inventory that was stolen during February from one of the company's warehouses. Required: Using the template below, calculate the estimated inventory at the end of February, assuming a gross profit ratio of 45%. Beginning Invento $57,800 Plus: Net purchases Freight-in 2,700 Cost of Goods Available for Sale Less: Cost of Goods Sold Net Sales Less Estimated Gross Profit Estimated Cost of Goods Sold Estimated Inventory before Theft Less: Stolen Inventory Estimated Ending Inventory 8,100

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