In 2022, Sargent Company experienced a major casualty loss. The roof of its warehouse collapsed in an ice storm and destroyed its entire inventory. The company began the year with inventory of $300. It made purchases of $5,640 but returned $80 worth of merchandise. Sales prior to the ice storm were $9,400. Sargent must use the gross profit method to determine inventory on hand on the date of the casualty. The following is an excerpt of its income statement for the last three years. 2019 2020 2021 Net Sales $5,000 $6,000 $9,000 Cost of Goods Sold 2,150 2,340 3,312 General and Administrative Expense 500 600 900 Depreciation Expense 125 200 325 Operating Income $2,225 $2,860 $4,463 Requirement. Assume that Sargent uses the most recent three years of net sales and cost of goods sold to determine its historical gross profit. What are estimated cost of goods sold, estimated gross profit, and estimated ending inventory? Begin by calculating the gross profit percentage for each of the last three years. (Round the gross profit percentage to one decimal place, X.X%.) 2019 2020 2021 Gross Profit Percentage % % % Now determine the average gross profit percentage over the three year period. (Round the gross profit percentage to one decimal place, X.X%.) The average gross profit percentage over the three year period is %. Identify the appropriate formula and then calculate Sargent's estimated cost of goods sold for 2022. (Round any interim percentage calculations to one decimal place, X.X%. Round the final estimated cost of goods sold amount that you enter into the table below to the nearest whole dollar.) Estimated cost of goods sold = = Identify the appropriate formula and then calculate Sargent's estimated gross profit for the current year. (Round any interim calculations and the final estimated gross profit amount that you enter into the table below to the nearest whole dollar.) Estimated gross profit = = Identify the appropriate formula and then calculate Sargent' estimated ending inventory. (Round any interim calculations and the final estimated ending inventory amount that you enter into the table below to the nearest whole dollar.) Estimated ending inventory = = Assume that Sargent uses the most recent two years of net sales and cost of goods sold to determine its historical gross profit. What are estimated cost of goods sold, estimated gross profit, and estimated ending inventory? First determine the average gross profit percentage over the two year period. (Round the gross profit percentage to one decimal place, X.X%.) The average gross profit percentage over the two year period is %. Calculate Sargent's estimated cost of goods sold for 2022 assuming the most recent two years of net sales and cost of goods sold to determine its historical gross profit. (Round any interim percentage calculations to one decimal place, X.X%. Round the final estimated cost of goods sold amount that you enter into the table below to the nearest whole dollar.) Estimated cost of goods sold = Calculate Sargent's estimated gross profit for the current year. (Round any interim calculations and the final estimated gross profit amount that you enter into the table below to the nearest whole dollar.) Estimated gross profit = Calculate Sargent's estimated ending inventory. (Round any interim calculations and the final estimated ending inventory amount that you enter into the table below to the nearest whole dollar.) Estimated ending inventory = Comment on the differences in estimated cost of goods sold, estimated gross profit, and estimated ending inventory The two-year gross profit percentage is ▼ higher OR lower than the three-year gross profit percentage. This difference leads to a ▼ higher OR lower cost of goods sold, ▼ higher OR lower gross profit and ▼ higher lower ending inventory when the two-year estimation is used.

In 2022, Sargent Company experienced a major casualty loss. The roof of its warehouse collapsed in an ice storm and destroyed its entire inventory. The company began the year with inventory of $300. It made purchases of $5,640 but returned $80 worth of merchandise. Sales prior to the ice storm were $9,400. Sargent must use the gross profit method to determine inventory on hand on the date of the casualty. The following is an excerpt of its income statement for the last three years. 2019 2020 2021 Net Sales $5,000 $6,000 $9,000 Cost of Goods Sold 2,150 2,340 3,312 General and Administrative Expense 500 600 900 Depreciation Expense 125 200 325 Operating Income $2,225 $2,860 $4,463 Requirement. Assume that Sargent uses the most recent three years of net sales and cost of goods sold to determine its historical gross profit. What are estimated cost of goods sold, estimated gross profit, and estimated ending inventory? Begin by calculating the gross profit percentage for each of the last three years. (Round the gross profit percentage to one decimal place, X.X%.) 2019 2020 2021 Gross Profit Percentage % % % Now determine the average gross profit percentage over the three year period. (Round the gross profit percentage to one decimal place, X.X%.) The average gross profit percentage over the three year period is %. Identify the appropriate formula and then calculate Sargent's estimated cost of goods sold for 2022. (Round any interim percentage calculations to one decimal place, X.X%. Round the final estimated cost of goods sold amount that you enter into the table below to the nearest whole dollar.) Estimated cost of goods sold = = Identify the appropriate formula and then calculate Sargent's estimated gross profit for the current year. (Round any interim calculations and the final estimated gross profit amount that you enter into the table below to the nearest whole dollar.) Estimated gross profit = = Identify the appropriate formula and then calculate Sargent' estimated ending inventory. (Round any interim calculations and the final estimated ending inventory amount that you enter into the table below to the nearest whole dollar.) Estimated ending inventory = = Assume that Sargent uses the most recent two years of net sales and cost of goods sold to determine its historical gross profit. What are estimated cost of goods sold, estimated gross profit, and estimated ending inventory? First determine the average gross profit percentage over the two year period. (Round the gross profit percentage to one decimal place, X.X%.) The average gross profit percentage over the two year period is %. Calculate Sargent's estimated cost of goods sold for 2022 assuming the most recent two years of net sales and cost of goods sold to determine its historical gross profit. (Round any interim percentage calculations to one decimal place, X.X%. Round the final estimated cost of goods sold amount that you enter into the table below to the nearest whole dollar.) Estimated cost of goods sold = Calculate Sargent's estimated gross profit for the current year. (Round any interim calculations and the final estimated gross profit amount that you enter into the table below to the nearest whole dollar.) Estimated gross profit = Calculate Sargent's estimated ending inventory. (Round any interim calculations and the final estimated ending inventory amount that you enter into the table below to the nearest whole dollar.) Estimated ending inventory = Comment on the differences in estimated cost of goods sold, estimated gross profit, and estimated ending inventory The two-year gross profit percentage is ▼ higher OR lower than the three-year gross profit percentage. This difference leads to a ▼ higher OR lower cost of goods sold, ▼ higher OR lower gross profit and ▼ higher lower ending inventory when the two-year estimation is used.

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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Identify the appropriate formula and then calculate Sargent's estimated cost of goods sold for 2022.

(Round any interim percentage calculations to one decimal place, X.X%. Round the final estimated cost of goods sold amount that you enter into the table below to the nearest whole dollar.)

Estimated cost of goods sold

Identify the appropriate formula and then calculate Sargent's estimated gross profit for the current year. (Round any interim calculations and the final estimated gross profit amount that you enter into the table below to the nearest whole dollar.)

Estimated gross profit

Identify the appropriate formula and then calculate Sargent' estimated ending inventory. (Round any interim calculations and the final estimated ending inventory amount that you enter into the table below to the nearest whole dollar.)

Estimated ending inventory

Assume that Sargent uses the most recent two years of net sales and cost of goods sold to determine its historical gross profit. What are estimated cost of goods sold, estimated gross profit, and estimated ending inventory?

First determine the average gross profit percentage over the two year period. (Round the gross profit percentage to one decimal place, X.X%.)

The average gross profit percentage over the two year period is

Calculate Sargent's estimated cost of goods sold for 2022 assuming the most recent two years of net sales and cost of goods sold to determine its historical gross profit. (Round any interim percentage calculations to one decimal place, X.X%. Round the final estimated cost of goods sold amount that you enter into the table below to the nearest whole dollar.)

Estimated cost of goods sold

Calculate Sargent's estimated gross profit for the current year. (Round any interim calculations and the final estimated gross profit amount that you enter into the table below to the nearest whole dollar.)

Estimated gross profit

Calculate Sargent's estimated ending inventory. (Round any interim calculations and the final estimated ending inventory amount that you enter into the table below to the nearest whole dollar.)

Estimated ending inventory

Comment on the differences in estimated cost of goods sold, estimated gross profit, and estimated ending inventory

The two-year gross profit percentage is ▼ higher OR lower than the three-year gross profit percentage. This difference leads to a ▼ higher OR lower cost of goods sold, ▼ higher OR lower gross profit and

▼ higher lower ending inventory when the two-year estimation is used.

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