Mark Price Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of
Mark Price Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May.
\r\nInventory, May 1 $ 160,000
\r\nPurchases (gross) 640,000
\r\nFreight-in 30,000
\r\nSales revenue 1,000,000
\r\nSales returns 70,000
\r\nPurchase discounts 12,000
\r\nInstructions
\r\n(a) Compute the estimated inventory at May 31, assuming that the gross profit is 30% of sales.
\r\n(b) Compute the estimated inventory at May 31, assuming that the gross profit is 30% of cost.