Marc Price Co. uses the gross profit method to estimateinventory for monthly rep

Question

Marc Price Co. uses the gross profit method to estimateinventory for monthly reporting purposes. Presented below isinformation for themon of May. Inventory, May1         160,000 Purchases(gross)           640,000 Freight-in                        30,000 Sales                            1,000,000 Salesreturns                     70,000 Purchasediscounts             12,000 a. compute the estimated inventory at May 31, assuming thatthe gross profit is 30% of sales. b. compute the estimated inventory at May 31, assuming thatthe gross profit is 30% of cost. Marc Price Co. uses the gross profit method to estimateinventory for monthly reporting purposes. Presented below isinformation for themon of May. Inventory, May1         160,000 Purchases(gross)           640,000 Freight-in                        30,000 Sales                            1,000,000 Salesreturns                     70,000 Purchasediscounts             12,000 a. compute the estimated inventory at May 31, assuming thatthe gross profit is 30% of sales. b. compute the estimated inventory at May 31, assuming thatthe gross profit is 30% of cost.

Explanation / Answer

x. rong>a. compute the estimated inventory at May 31, assuming that the gross profit is 30% of sales.

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