Gardner Company has maintained a 30 percent average gross margin on net sales for several years....
Gardner Company has maintained a 30 percent average gross margin
on net sales for several years. Given the following data for 2003,
what is the approximate inventory on December 31, 2003, computed by
the gross margin method?
Inventory, January 1: $6,900
Purchases in 2003: $37,375
Net Sales in 2003 $51,750
|
$ 8,625 |
|
|
$28,750 |
|
|
$ 8,050 |
|
|
$15,525 |
Generally, the cost of inventory should include:
|
Only the net purchase price. |
|
|
The purchase price plus transportation costs. |
|
|
All the costs necessary to acquire the goods and place them in a position and condition for sale to the customer. |
|
|
Every cost needed to get the inventory sold. |
Homework Answers
| 1 | ||
| Inventory, January 1 | 6900 | |
| Add: Purchases in 2003 | 37375 | |
| Total cost of goods available | 44275 | |
| Less: Cost of goods sold | -36225 | =51750*(1-30%) |
| Inventory on December 31, 2003 | 8050 | |
| Option 3 $ 8,050 is correct | ||
| 2 | ||
| Generally, the cost of inventory should include All the costs necessary to acquire the goods and place them in a position and condition for sale to the customer. | ||
| Option 3 is correct | ||
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