Financial accounting questions On January 1, 2016, Company X had an inventory balance of$200,000. During the year, Company X had net purchases of$1,000,000 and net sales of $900,000. Historically, Company X'sgross profit ratio has been 40%. Using the gross profit method, whatis Company X's estimated ending inventory balance?

Step 1: Define Gross ProfitIn accounting, the amount of gross profit is reported in the income…

Answered: On January 1, 2016, Company X had an…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 46E

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Reid Company uses the periodic inventory system. On January 1, it had an inventory balance of 250,000. During the year, it made 613,000 of net purchases. At the end of the year, a physical inventory showed it had ending inventory of 140,000. Calculate Reid Companys cost of goods sold for the year.
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On January 1, 2016, Company X had an inventory balance of $200,000. During the year, Company X had net purchases of $1,000,000 and net sales of $900,000. Historically, Company X's gross profit ratio has been 40%. Using the gross profit method, what is Company X's estimated ending inventory balance?