Question

Wayward Company wants to prepare interim financial statements for the first quarter. The company wishes to avoid making a physical count of inventory. Wayward's gross profit rate averages 34%. The following information for the first quarter is available from its records. January 1 beginning inventory$ 302,580 Cost of goods purchased 941,040 Sales 1,211,160 Sales returns 8,410 Required: Use the gross profit method to estimate the company's first quarter ending inventory. Beginning inventory Net cost of goods purchased Cost of goods available for sale Estimated cost of goods sold Estimated March 31 inventory 302,580 941,040 1,243,620 $

Answer 1

	since gross profit is 34%
	so cost of goods sold will be 100%-34%=				66%	of net sales
	Net sales
	Sales				1,211,160
	less sales return				-8,410
	Net sales				1,202,750
	estimated cost of goods sold
	net sales				1,202,750
	percentage				66%
	estimated cost of goods sold				793815
	Beginning inventory				302,580
	net cost of goods purchased				941,040
	Cost of goods available for sale				1,243,620
	Estimated cost of goods sold				793815
	Estimated March 31 inventory				449,805