Ernst Equipment Co. wants to prepare interim financial statements for the first quarter. The company wishes to avoid making a physical count of inventory. Ernst’s gross profit rate averages 30%. The following information for the first quarter is available from its records.
January 1 beginning inventory | $ 752,880 |
Cost of goods purchased | 2,159,630 |
Sales | 3,710,250 |
Sales returns | 74,200 |
Required
Use the gross profit method to estimate the company’s first quarter ending inventory.
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