value 100.00 points Wayward Company wants to prepare interim financial statement

Question

value 100.00 points Wayward Company wants to prepare interim financial statements for the first quarter. The company wishes to avoid making a physical count of inventory. Wayward's gross profit rate averages 35%. The following information for the first quarter is available from its records. January 1 beginning inventory Cost of goods purchased Net sales $300,260 939,050 ,181,700 Required: Use the gross profit method to estimate the company's first-quarter ending inventory. Beginning inventory Cost of goods purchased Cost of goods available for sale Estimated cost of goods sold Estimated March 31 inventory 300,260 939,050 1,239,310 References eBook & Resources Leaming Objective: 05-P4 Appendix 58-Apply both the retail inventory and gross profit methods to estimate inventory Worksheet Difficulty: 2 Medium

Explanation / Answer

Beginning Inventory = $300,260
Cost of Goods Purchased = $939,050

Cost of Goods available for sale = Beginning Inventory + Cost of Goods Purchased
Cost of Goods available for sale = $300,260 + $939,050
Cost of Goods available for sale = $1,239,310

Net Sales = $1,181,700
Gross Profit Rate = 35%

Cost of Goods Sold = Net Sales * (100% - Gross Profit Rate)
Cost of Goods Sold = $1,181,700 * (100% - 35%)
Cost of Goods Sold = $768,105

Ending Inventory = Cost of Goods available for sale - Cost of Goods Sold
Ending Inventory = $1,239,310 - $768,105
Ending Inventory = $471,205

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