Explore BrainMass
Share

Explore BrainMass

    Mark Price Company uses the gross profit method to estimate

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

    Mark Price Company uses the gross profit method to estimate inventory
    for monthly reporting purposes. Presented below is information for the month of May.

    Inventory, May 1 $ 160,000
    Purchases (gross) 640,000
    Freight-in 30,000
    Sales 1,000,000
    Sales returns 70,000
    Purchase discounts 12,000

    Instructions

    (a) Compute the estimated inventory at May 31, assuming that the gross profit is 30% of sales.
    (b) Compute the estimated inventory at May 31, assuming that the gross profit is 30% of cost.

    © BrainMass Inc. brainmass.com October 10, 2019, 3:49 am ad1c9bdddf
    https://brainmass.com/economics/output-and-costs/mark-price-company-uses-the-gross-profit-method-to-estimate-437087

    Solution Preview

    a) SALES $ 930,000
    Less: COGS
    Beginning Inventory $ 160,000
    Purchases (net) $ 628,000
    Freight In $ 30,000
    COG Available $ 818,000
    Less: ...

    Solution Summary

    Mark Price Company uses the gross profit method to estimate inventory
    for monthly reporting purposes. Presented below is information for the month of May.

    Inventory, May 1 $ 160,000
    Purchases (gross) 640,000
    Freight-in 30,000
    Sales 1,000,000
    Sales returns 70,000
    Purchase discounts 12,000

    Instructions

    (a) Compute the estimated inventory at May 31, assuming that the gross profit is 30% of sales.
    (b) Compute the estimated inventory at May 31, assuming that the gross profit is 30% of cost.

    $2.19