Question

Return to Blackboard Kieso, Intermediate Accounting, 16e CALCULATOR PRINTER VERSION BACK Exercise 9-14 method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May 171,200 596,600 28,400 957,000 64,700 12,300 Inventory, May1 Purchases (gross) Freight-in Sales revenue Sales returns Purchase discounts Compute the estimated inventory at May 31, assuming that the gross profit is 20% of net sales. The estimated Jnventory at May 33 8 74% and nnainswer to decinal the estimated inventory at May 31, assuming that the gross profit is 20% of cost. (Round percentage of sales to 2 decimal places ea places, e.g. 6,225.) The estimated inventory at May 31 Click if you would like to Show Work for this question: Qen Show Work Question Attempts: O of 3 used SAVE FOR LATER SUBMET ANSWER

Answer 1

Inventor.May 1 = 171,200

Purchase (gross) = 596,600

Freight-in = 28,400

Purchase discounts = 12,300

Goods available = 171,200 + 596,600 + 28,400 - 12,300 = 783900

Sales revenue = 957,000

Sales returns = 64,700

Net sales = 957,000 - 64,700 = 892,300

a)

Given

gross profit = 20% of net sales

Cost of goods sold = 80% of net sales

cost of goods sold = 0.80 * 892300 = 713840

Goods available - Ending Inventory = $713840

Estimated inventory (ending inventory) = 783900 - 713840 = $70060

b)

Gross profit = 20% of cost = 0.2 / 1.2 = 16.67% of sales

Cost of goods sold = (100%-16.67%) * net sales = 83.33 % of net sales

Cost of goods sold = 0.8333 * 892300 = 743583.33

Goods available - Closing inventory = 743583.33

Closing inventory = Goods available - 743583.33 = 783900 - 743583.33 = $40316.6667 ~ $40316.67