E9-12
Astaire 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 |
172,000 |
|
Purchases (gross) |
643,800 |
|
Freight-in |
30,500 |
|
Sales |
1,091,300 |
|
Sales returns |
76,800 |
|
Purchase discounts |
12,320 |
Instructions:
(a) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of sales.
(b) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost.