Question

CALCULATOR INTER VERSION BACK NEX Exercise 9-14 Metlock 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 $ 156,500 Purchases (gross) 628,400 Freight-in 31,900 Sales revenue 1,029,400 Sales returns 74,600 Purchase discounts 10.800 Compute the estimated Inventory at May 31, assuming that the gross profit is 40% of net sales The estimated Inventory at May 31 Compute the estimated Inventory at May 31, assuming that the gross profit is 40% of cost. (Round percentage of sales to 2 decimal places places, 9.6,225.) and imalanwer to decimal The estimated Inventory at May 31 Click if you would like to show Work for this questioni Oren Show Work LINK TO TEXT Question Attempts of 3 used SAVE FOR LATER BUBMIT ANSWER

Answer 1

Sol: Summary of Inputs given Inventory on hand 1 may Purchases Purchase discounts Freight Sales Revenue Sales Returns 156,500 628,400 10,800 31,900 1,029,400 74,600 1. Value of Inventory on 31st May, Assuming gross profit is 40% on net sales 156,500 Value of Inventory before sale Inventory on hand 1 May Purchases Less: Discount Freight Total Inventory before Sale (A) 628,400 10,800 617,600 31,900 806,000 Value of Inventory Sold Sales Revenue Less:Sales Returns Net Sale Revenue Gross Profit margin @ 40% on net sales Value of Inventory Sold (B) 1,029,400 74,600 954,800 381,920 572,880 Value of Inventory on 31st May-(A)-(B) 233,120

2. Value of Inventory on 31st May, Assuming gross profit is 40% of cost 156,500 Value of Inventory before sale Inventory on hand 1 May Purchases Less: Discount Freight Total Inventory before Sale (A) 628,400 10,800 617,600 31,900 806,000 Value of Inventory Sold Sales Revenue Less:Sales Returns Net Sale Revenue Gross Profit margin @ 40 of cost-(954800*40/140) see note 1 below Value of Inventory Sold (B) 1,029,400 74,600 954,800 272,800 682,000 Value of Inventory on 31st May-(A)-(B) 124,000 Note 1: Illustration for calculation of profit 40% of cost Cost Profit Sale 100 40 140