Stellar Company uses the gross profit method to estimate inventory for monthly r

Question

Stellar 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 Purchases (gross) Freight-in Sales revenue Sales returns Purchase discounts $167,300 580,800 32,100 1,079,300 73,300 11,300 Compute the estimated inventory at May 31, assuming that the gross profit is 35% of net sales The estimated inventory at May 31 LINK TO TEXT VIDEO: SIMILAR EXERCISE Compute the estimated inventory at May 31, assuming that the gross profit is 35% of cost. (Round percentage of sales to 2 decimal places, e.g 78.74% and final answer to 0 decimal places, eg. 6,225.) The estimated inventory at May 31 LINK TO TEXT VIDEO: SIMILAR EXERCISE

Explanation / Answer

1) Calculate estimated inventory :

2) Calculate estimated inventory :

Sales 1079300 Less: Sales return (73300) Net sales 1006000 Beginning inventory 167300 Purchase 580800 Freight in 32100 Less; Purchase discount (11300) Cost of goods available for sale 768900 Gross profit (1006000*65%) (653900) Ending inventory 115000

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