BB Inventory $275,000; Net Sales $960,000; Purchases $465,000; Gross Profit percentage 44%. What is the estimated EB Inventory using the Gross Profit Method? Optional Answers: 1. $202,400 2. $325,600 3. $422,400 4. $740,000
BB Inventory = $275,000
Net Sales = $960,000
Purchases = $465,000
Gross Profit percentage = 44%
Gross Profit = Net Sales x Gross Profit percentage
= 960,000 x 44%
= $422,400
Cost of goods sold = Net sales - Gross profit
= 960,000 - 422,400
= $537,600
Cost of goods sold = BB Inventory + Purchases - EB Inventory
537,600 = 275,000 + 465,000 - EB Inventory
EB Inventory = $202,400
Estimated EB Inventory using the Gross Profit Method = $202,400
First option is correct
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