Henderson Company uses the gross profit method to estimate ending inventory and cost of goods sold when preparing monthlyfinancial statements required by its bank. Inventory on hand at the end of July was $124,000. The following information for the monthof August was available from company records:PurchasesFreight-inSales.Sales returnsPurchases returns$ 222,0005,500353,0009,3004,600In addition, the controller is aware of $10,000 of inventory that was stolen during August from one of the company's warehouses.Required:1. Calculate the estimated inventory at the end of August, assuming a gross profit ratio of 30%.2. Calculate the estimated inventory at the end of August, assuming a markup on cost of 25%.1. Estimated ending inventory2. Estimated ending inventory

Name: Henderson Company uses the gross profit method to estimate ending inv
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Description: Henderson Company uses the gross profit method to estimate ending inventory and cost of goods sold when preparing monthlyfinancial statements required by its bank. Inventory on hand at the end of July was $124,000. The following information for the

The cost of goods sold includes the cost of goods that are sold during the period. The gross profit is calculated as the difference between the revenue and cost of goods sold. Part 1.Calculation of the ending inventory at gross profit ratio 30%RetailCostBeginning inventory $124,000Plus: Net purchase (222,000 – 4,600)$217,400Freight-in$5,500Cost of goods available for sale$346,900Less: Cost of goods soldNet sales (353,000-9,300)$343,700Less: Estimated gross profit ($343,700*30%)($103,110)Estimated cost of goods sold$240,590Estimated cost of inventory before theft $106,310Less: Stolen inventory (10,000)Estimated ending inventory $96,310 Part 2.Calculation of the ending inventory at gross profit ratio 25%RetailCostBeginning inventory $124,000Plus: Net purchase (222,000 – 4,600)$217,400Freight-in$5,500Cost of goods available for sale$346,900Less: Cost of goods soldNet sales (353,000-9,300)$343,700Less: Estimated gross profit ($343,700*25%)($85,925)Estimated cost of goods sold$257,775Estimated cost of inventory before theft $89,125Less: Stolen inventory (10,000)Estimated ending inventory $79,125Part 1.Estimated ending inventory (Gross profit 30%) = $96,310Part 2. Estimated ending inventory (Gross profit 30%) = $79,125

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Henderson Company uses the gross profit method to estimate ending inventory and cost of goods sold when preparing monthly financial statements required by its bank. Inventory on hand at the end of July was $124,000. The following information for the month of August was available from company records: Purchases Freight-in Sales Sales returns Purchases returns $ 222,000 5,500 1. Estimated ending inventory 2. Estimated ending inventory. 353,000 9,300 4,600 In addition, the controller is aware of $10,000 of inventory that was stolen during August from one of the company's warehouses. Required: 1. Calculate the estimated inventory at the end of August, assuming a gross profit ratio of 30%. 2. Calculate the estimated inventory at the end of August, assuming a markup on cost of 25%.

Henderson Company uses the gross profit method to estimate ending inventory and cost of goods sold when preparing monthly financial statements required by its bank. Inventory on hand at the end of July was $124,000. The following information for the month of August was available from company records: Purchases Freight-in Sales Sales returns Purchases returns $ 222,000 5,500 1. Estimated ending inventory 2. Estimated ending inventory. 353,000 9,300 4,600 In addition, the controller is aware of $10,000 of inventory that was stolen during August from one of the company's warehouses. Required: 1. Calculate the estimated inventory at the end of August, assuming a gross profit ratio of 30%. 2. Calculate the estimated inventory at the end of August, assuming a markup on cost of 25%.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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