Pina Company uses the gross profit method to estimate inventory for monthly repo
ID: 2594090 • Letter: P
Question
Pina 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 $ 158,100
Purchases (gross) 665,400
Freight-in 29,700
Sales revenue 937,900
Sales returns 69,300
Purchase discounts 12,900
Compute the estimated inventory at May 31, assuming that the gross profit is 40% of net sales.
The estimated inventory at May 31
$
Compute the estimated inventory at May 31, assuming that the gross profit is 40% of cost.
$
The estimated inventory at May 31$
Explanation / Answer
1 Inventory, May 1 158100 Purchases (gross) 665400 Less: Purchase discounts -12900 652500 Freight-in 29700 Cost of goods available 840300 Cost of goods sold: Sales revenue 937900 Less: Sales returns -69300 Net sales 868600 Less: Gross profit -347440 Cost of goods sold 521160 Estimated inventory at May 31 319140 2 Inventory, May 1 158100 Purchases (gross) 665400 Less: Purchase discounts -12900 652500 Freight-in 29700 Cost of goods available 840300 Cost of goods sold: Sales revenue 937900 Less: Sales returns -69300 Net sales 868600 Less: Gross profit -248171 Cost of goods sold 620429 Estimated inventory at May 31 219871