Kids Costumes estimates its inventory by the gross profit method. The gross profit has averaged 39% of net sales. The company's inventory records reveal the following data: Inventory, July 1 $268,000 Transactions during July: Purchases 7,661,000 Purchase discounts 171,000 Purchase returns 32,000 Sales 8,788,000 35,000 Sales returns 1. Estimate the July 31 inventory using the gross profit method. 2. Prepare the July income statement through gross profit for Kids Costumes.

Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter7: Inventories: Cost Measurement And Flow Assumptions
Section: Chapter Questions
Problem 3RE: Reid Company uses the periodic inventory system. On January 1, it had an inventory balance of...
icon
Related questions
Question

Provide solution

Kids Costumes estimates its inventory by the gross profit method.
The gross profit has averaged 39% of net sales. The company's
inventory records reveal the following data:
Inventory, July 1
$268,000
Transactions during July:
Purchases
7,661,000
Purchase discounts
171,000
Purchase returns
32,000
Sales
8,788,000
35,000
Sales returns
1. Estimate the July 31 inventory using the gross profit method.
2. Prepare the July income statement through gross profit for Kids
Costumes.
Transcribed Image Text:Kids Costumes estimates its inventory by the gross profit method. The gross profit has averaged 39% of net sales. The company's inventory records reveal the following data: Inventory, July 1 $268,000 Transactions during July: Purchases 7,661,000 Purchase discounts 171,000 Purchase returns 32,000 Sales 8,788,000 35,000 Sales returns 1. Estimate the July 31 inventory using the gross profit method. 2. Prepare the July income statement through gross profit for Kids Costumes.
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Century 21 Accounting General Journal
Century 21 Accounting General Journal
Accounting
ISBN:
9781337680059
Author:
Gilbertson
Publisher:
Cengage
Managerial Accounting: The Cornerstone of Busines…
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
College Accounting, Chapters 1-27
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
Financial Accounting
Financial Accounting
Accounting
ISBN:
9781337272124
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Financial Accounting
Financial Accounting
Accounting
ISBN:
9781305088436
Author:
Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:
Cengage Learning