Explore BrainMass

Explore BrainMass

    Gross Profit Method..

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    I have an Accounting II problem that is asking me to estimate the cost of the merchandise inventory of San Lucas Company on December 31 by the gross profit method. The data shows only the cost column and I need to figure out the retail column. However, I do not know how to figure out the retail side. One I get the first couple of figures for the retail side, I know how to finish.

    Under Cost:

    Mechandise inventory, November 1 225,000
    Transactions During Nov and Dec:
    Purchases (Net) 1,685,000
    Sales 2,815,000
    Sales returns and allowances 85,000
    Estimated Gross Profit Rate 40%

    So my question is how do I figure out the merchanidse inventory and net purchases for the retail side?

    © BrainMass Inc. brainmass.com March 4, 2021, 8:10 pm ad1c9bdddf

    Solution Preview

    Gross Sales are typically = Sales - Sales returns and allowances = 2,815,000-85,000 = ...

    Solution Summary

    Gross profit method is provided for Lucas Company.