Problem

(L. OBJ. 7) Estimating ending inventory by the gross profit method [10-15 min] New Life...

(L. OBJ. 7) Estimating ending inventory by the gross profit method [10-15 min]

New Life Landscaping and Nursery began December with inventory of $47,000. During December, New Life made net purchases of $30,300 and had net sales of $63,000. For the past several years, New Life’s gross profit has been 35% of sales.

Requirement

1. Use the gross profit method to estimate the cost of the ending inventory for December.

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