Estimating ending inventory-gross profit method LO P4 On January 1, JKR Shop had

Question

Estimating ending inventory-gross profit method LO P4 On January 1, JKR Shop had $225,000 of inventory at cost. In the first quarter of the year, it purchased $795,000 of merchandise, returned $11,550, and paid freight charges of $18,800 on purchased merchandise, terms FOB shipping point. The company's gross profit averages 30%, and the store had $1,000,000 of net sales (at retail) in the first quarter of the year. Use the gross profit method to estimate its cost of inventory at the end of the first quarter. mated ending inventory Sales cost of inventory at the end of the first quarter.

Explanation / Answer

Therefore the ending inventory is $327,250.

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