Question

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

Blossom 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       $ 160,700
Purchases (gross)       595,100
Freight-in       28,600
Sales revenue       1,028,100
Sales returns       74,200
Purchase discounts       11,600


  
Compute the estimated inventory at May 31, assuming that the gross profit is 25% of net sales.

The estimated inventory at May 31      
$

LINK TO TEXT

  
Compute the estimated inventory at May 31, assuming that the gross profit is 25% 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      
$

Homework Answers

Answer #1

1) Compute estimated inventory :

Beginning inventory 160700
Purchase 595100
Purchase discount -11600
Freight in 28600
Cost of purchase 612100
Cost of goods sold
Net sales (1028100-74200) 953900
Less; Gross profit -238475 -715425
Cost of ending inventory 57375

2) Compute estimated inventory :

Beginning inventory 160700
Purchase 595100
Purchase discount -11600
Freight in 28600
Cost of purchase 612100
Cost of goods sold
Net sales (1028100-74200) 953900
Less; Gross profit (953900*25/125) -190780 763120
Cost of ending inventory 9680
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