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Exercise 9-14 (Part Level Submission) Sandhill Company uses the gross profit method to estimate inventory for...

Exercise 9-14 (Part Level Submission) Sandhill Company uses the gross profit method to estimate inventory for monthly reporti(b) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost. (Round percentage of sales to 2

Exercise 9-14 (Part Level Submission) Sandhill 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 Purchases (gross) Freight-in Sales revenue Sales returns Purchase discounts $ 160,700 595,100 28,600 1,028,100 74,200 11,600 (a) Your answer is correct. Compute the estimated inventory at May 31, assuming that the gross profit is 25% of net sales. The estimated inventory at May 31 1 5 7375 SHOW SOLUTION SHOW ANSWER
(b) 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 O decimal places, e.g. 6,225.) The estimated inventory at May 31
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Answer #1
(a) Computation of estimated inventory at May, 31,
assuming that the gross profit is 25% of net sales
$ $
Inventory, May 1          160,700.00
Purchases (gross)          595,100.00
Purchase discounts          (11,600.00)
Freight-in            28,600.00
Goods Available for sale          772,800.00
Less:
Sales (at selling price) 1,028,100.00
Sales returns      (74,200.00)
Net sales      953,900.00
Less gross profit (25% of $953,900)      238,475.00
Sales (at cost)          715,425.00
Inventory, May 31          57,375.00
(b) Computation of estimated inventory at May, 31,
assuming that the gross profit is 25% of cost
$ $
Inventory, May 1          160,700.00
Purchases (gross)          595,100.00
Purchase discounts          (11,600.00)
Freight-in            28,600.00
Goods Available for sale          772,800.00
Less:
Sales (at selling price) 1,028,100.00
Sales returns      (74,200.00)
Net sales      953,900.00
Less gross profit (953900*25/125)      190,780.00
Sales (at cost)          763,120.00
Inventory, May 31            9,680.00
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