Exercise 9-12
Mark Price 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
Purchases (gross)
Frieght-in
Sales revenue
Sales returns
Purchase discounts
$ 176,500
646,300
31,900
1,093,600
73,300
12,280
(a) Compute the estimated inventory at May 31, assuming that the gross profit is 30% of sales.
The estimated inventory at May 31
$
(b) Compute the estimated inventory at May 31, assuming that the gross profit is 30% of cost. (Round percentage of sales to 2 decimal places,
e.g. 78.74% and final answer to 0 decimal places, e.g. 6,225.)
The estimated inventory at May 31
$