Question

Jefferson Company has net sales of $301,000 and cost of goods available for sale of $270,100. If the gross profit ratio is typically 30%, the estimated cost of the ending Inventory under the gross profit method would be: Multiple Choice $30,900 $90.300 O $59.400 a $179,800 $110,000

Answer 1

Cost of goods sold ratio = 1 - Gross profit ratio

= 1 - 0.3

= 0.7

Cost of goods sold = Sales * 0.7

= $301,000 * 0.7

= $210,700

Ending inventory = Cost of goods available for sale - Cost of goods sold

= $270,100 - $210,700

= $59,400