Question

Presented below is information related to Stellar Corporation for the current year.

Beginning inventory		$ 596,100
Purchases		1,522,700
Total goods available for sale				$2,118,800
Sales revenue				2,590,000

Compute the ending inventory, assuming that (a) gross profit is 45% of sales, (b) gross profit is 60% of cost, (c) gross profit is 37% of sales, and (d) gross profit is 25% of cost. (Round ratios for computational purposes to 1 decimal place, e.g. 78.7% and final answers to 0 decimal places, e.g. 28,987.)

				Ending Inventory
(a)		Gross profit is 45% of sales		$
(b)		Gross profit is 60% of cost		$
(c)		Gross profit is 37% of sales		$
(d)		Gross profit is 25% of cost		$

Answer 1

		Ending Inventory
a)	Gross profit is 45% of sale	$694,300
b)	Gross profit is 60% of cost	$500,500
c)	Gross profit is 37% of sales	$487,100
d)	Gross profit is 25% of cost	$46,800
	Working Note:-
	a) Gross profit is 45% of sale
	Cost of goods sold = Sale - Gross Profit
	Cost of goods sold =2,590,000 - 45%*2,590,000
	Cost of goods sold = 1,424,500
	Ending Inventory = Total goods available for sale -cost of goods sold
	Ending Inventory = 2,118,800 - 1,424,500
	Ending Inventory = 694,300
	b) Gross profit is 60% of cost
	Cost of goods sold = Sale - Gross Profit
	Cost of goods sold =2,590,000 - (60/160)*2,590,000
	Cost of goods sold = 1,618,750
	Ending Inventory = Total goods available for sale -cost of goods sold
	Ending Inventory = 2,118,800 - 1,618,750
	Ending Inventory = 500,500
	c) Gross profit is 37% of sale
	Cost of goods sold = Sale - Gross Profit
	Cost of goods sold =2,590,000 - 37%*2,590,000
	Cost of goods sold = 1,631,700
	Ending Inventory = Total goods available for sale -cost of goods sold
	Ending Inventory = 2,118,800 - 1,631,700
	Ending Inventory = 487,100
	d) Gross profit is 25% of cost
	Cost of goods sold = Sale - Gross Profit
	Cost of goods sold =2,590,000 - (25/125)*2,590,000
	Cost of goods sold = 2,072,000
	Ending Inventory = Total goods available for sale -cost of goods sold
	Ending Inventory = 2,118,800 - 2,072,000
	Ending Inventory = 46,800