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.
Mechandise inventory, November 1 225,000
Transactions During Nov and Dec:
Purchases (Net) 1,685,000
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
Gross Sales are typically = Sales - Sales returns and allowances = 2,815,000-85,000 = ...
Gross profit method is provided for Lucas Company.