Henderson Company uses the gross profit method to estimate endinginventory and cost of goods sold when preparing monthly financialstatements required by its bank. Inventory on hand at the end of July was$119,000. The following information for the month of August was availablefrom company records:PurchasesFreight-inSalesSales returnsPurchases returns$ 212,0004,500343,0008,3003,600In addition, the controller is aware of $12,000 of inventory that was stolenduring August from one of the company's warehouses.1. Estimated ending inventory2. Estimated ending inventoryRequired:1. Calculate the estimated inventory at the end of August, assuming agross profit ratio of 25%.2. Calculate the estimated inventory at the end of August, assuming amarkup on cost of 25%.

The gross profit method is an inventory valuation technique used to estimate the ending inventory…

Henderson Company uses the gross profit method to estimate ending nventory and cost of goods sold when preparing monthly financial tatements required by its bank. Inventory on hand at the end of July was $119,000. The following information for the month of August was available rom company records: Purchases Freight-in Sales Sales returns Purchases returns $ 212,000 4,500 343,000 8,300 3,600 n addition, the controller is aware of $12,000 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 25%. 2. Calculate the estimated inventory at the end of August, assuming a markup on cost of 25%. 1. Estimated ending inventory 2. Estimated ending inventory

Henderson Company uses the gross profit method to estimate ending nventory and cost of goods sold when preparing monthly financial tatements required by its bank. Inventory on hand at the end of July was $119,000. The following information for the month of August was available rom company records: Purchases Freight-in Sales Sales returns Purchases returns $ 212,000 4,500 343,000 8,300 3,600 n addition, the controller is aware of $12,000 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 25%. 2. Calculate the estimated inventory at the end of August, assuming a markup on cost of 25%. 1. Estimated ending inventory 2. Estimated ending inventory

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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The Westmoreland Corporation uses a periodic system for its inventory. The company starts the current year with inventory costing $177,000. During the year, an additional $387,000 is paid for inventory purchases and $17,000 for transportation costs to get those items. A physical count at the end of the year finds $145,000 of ending inventory. How was each of these numbers derived? What is the company's cost of goods sold?
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Longmire & Sons made sales on credit to Alderman Sports totaling $500,000 on April 18. The cost of the goods sold is $400,000. Longmire estimates 3% of its sales to Alderman may be returned. On May 22, $9,000 worth of goods (with a cost of $7,200) are returned by Alderman. Longmire uses a periodic inventory system.
The following information applies to the questions displayed below.] Autumn Company began the month of October with inventory of $25,000. The following inventory transactions occurred during the month: The company purchased inventory on account for $37,000 on October 12. Terms of the purchase were 2/10, n/30. Autumn uses the net method to record purchases. The inventory was shipped f.o.b. shipping point and freight charges of $600 were paid in cash. On October 31, Autumn paid for the inventory purchased on October 12. During October inventory costing $19,500 was sold on account for $30,000. It was determined that inventory on hand at the end of October cost $42,360. 1. Assuming Autumn Company uses a perpetual inventory system, prepare journal entries for the above transactions. The company purchased inventory on account for $37,000 on October 12. Terms of the purchase were 2/10, n/30. Autumn uses the net method to record purchases. The inventory was shipped f.o.b. shipping point and…
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