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Calculating Gross Profit Percentage Given Estimated Inventory The following information is available for Fox Inc. for...

Calculating Gross Profit Percentage Given Estimated Inventory

The following information is available for Fox Inc. for its first quarter of 2020.

Cost of goods available for sale. $352,000

Net sales $434,000

Ending inventory estimated using the gross profit method $60,800

a. Determine cost of goods sold for the first quarter of 2020. $______

b.Determine gross profit percentage used to estimate ending inventory. $________
Note: Round to the nearest whole percentage (for example, enter 20 for 20.44%).
  Note: Round amount to the nearest dollar.

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Answer #1

a) The cost of goods sold for the first quarter of 2020 is calculated as follows:

The cost of goods sold = Cost of goods available for sale - Ending inventory

= $352,000 - $60,800

= $291,200

b) The gross profit percentage used to estimate ending inventory is calculated as follows:

Gross Profit = Net sales - Cost of goods sold

= $434,000 - $291,200

= $142,800

Gross profit percentage = Gross profit / Net sales *100

=  $142,800 / $434,000 *100

= 32.90%

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