Ernst Equipment Co. wants to prepare interim financial statements for the first quarter. The company wishes to avoid making a physical count of inventory. Ernst’s gross profit rate averages 30%. The following information for the first quarter is available from its records.
|
January 1 beginning inventory |
$ 752,880 |
|
Cost of goods purchased |
2,159,630 |
|
Sales |
3,710,250 |
|
Sales returns |
74,200 |
Required
Use the gross profit method to estimate the company’s first quarter ending inventory.