Question

The Duffy Company had a fire May 15, 2022, that destroyed all of its inventory. During the last five years, the company's gross profit rate has averaged 60%. The following information, up to May 15th, was salvaged from the accounting records: January 1 beginning inventory Purchases Purchase returns Transportation-In Sales Sales discounts Sales returns $240,000 540,000 21,000 5,700 800,000 9,600 14,000 Instructions: Use the gross profit method (Appendix 6B Page 6-31)) to prepare an estimate of the company's May 15th inventory. Use the data entry form located in the Learn Assessment Dropbox or the Learn Content section for Module 6.

Answer 1

1 5700 Answer is as follows: The Duff Company Estimate Gross Profit Method Inventory Particulars Amount ($) Beginning Inventory of Jan 240000 Cost of net purchases (540000-21000) 519000 Transporation-In Cost of Goods Available for sale 764400 -) Estimated cost of Goods sold: Net Sales (800000-9600-14000) = 776400 6) Gross profit margin: (465840) @60% 776400X 68% 310560 Estimated cost of Goods sold: (310560) Estimated Inventory on May 15th $ 453840