Question

Miller, Ltd. estimates the cost of its physical inventory at March 31 for use in an...

Miller, Ltd. estimates the cost of its physical inventory at March 31 for use in an interim financial statement. The gross profit percentage is 20%. The following account balances are available:

Inventory, March 1 Purchases
Sales during March

$220,000 164,000 350,000

What is estimate of the cost of inventory reported on the statement of financial position as at March 31?

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Answer #1
Calculation of estimated inventory at March 31
$ $
Beginning inventory          220,000.00
Add: Net purchase          164,000.00
Goods Available for sale          384,000.00
Less: Cost of goods sold:
Net sales      350,000.00
Less: Estimated gross profit (350,000*20%)          (70,000.00)
Estimated cost of goods sold         (280,000.00)
Estimated ending inventory        104,000.00
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