Question

Marin 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		$ 165,900
Purchases (gross)		633,400
Freight-in		30,300
Sales revenue		998,100
Sales returns		64,700
Purchase discounts		11,400

Compute the estimated inventory at May 31, assuming that the gross profit is 25% of net sales.

The estimated inventory at May 31

Answer 1