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
\$

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
\$

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