Problem

Estimating ending inventory: gross margin methodDon Green, owner of Plains Company, is rev...

Estimating ending inventory: gross margin method

Don Green, owner of Plains Company, is reviewing the quarterly financial statements and thinks the cost of goods sold is out of line with past years. The following historical data is available for 201 l and 2012:

 

2011

2012

Net sales

$160,000

$200,000

Cost of goods sold

70,000

90,000

At the end of the first quarter of 2013, Plains Company’s ledger had the following account balances:

Sales

$240,000

Purchases

160,000

Beginning inventory, January 1,2013

60,000

Required

Using the information provided, estimate the following for the first quarter of 2013:

a. Cost of goods sold. (Use average cost of goods sold percentage.)


b. Ending inventory at March 31 based on the historical cost of goods sold percentage.


c. Inventory shortage if the inventory balance as of March 31 is $100,000.

Step-by-Step Solution

Request Professional Solution

Request Solution!

We need at least 10 more requests to produce the solution.

0 / 10 have requested this problem solution

The more requests, the faster the answer.

Request! (Login Required)


All students who have requested the solution will be notified once they are available.
Add your Solution
Textbook Solutions and Answers Search