Question

A retailer in a health club carries vitamins, workout gear, and clothing that have 50%, 30% and 20% gross profit on the selling price respectively. Using the following information, what is the estimated ending inventory value for the first quarter?

Inventory of 1st: Vitamins: 320,000 Workout Gear:205000 Clothing:185000

purchases: Vitamins:575000 Workout gear:475000 Clothing:350000

sales Rev: Vitamins:1,050,000 Workout gear:820000 clothing: 400000

• : $666,500

• : $596,700

• : $691,000

• : $521,000

Answer 1

Cost of Goods available for sale = Beginning inventory + Purchases

Vitamins (320,000+575,000)	895,000
Workout gear (205,000+475,000)	680,000
Clothing (185,000+350,000)	535,000
Total Cost of Goods available for sale	2,110,000

Cost of Goods Sold = Sales - Gross profit

Vitamins (1,050,000 - 50%)	525,000
Workout gear (820,000 - 30%)	574,000
Clothing (400,000 - 20%)	320,000
Total Cost of goods sold	1,419,000

.

Estimated ending inventory = Total cost of goods available for sale - Total cost of goods sold

= 2,110,000 - 1,419,000

= $691,000