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On January 1, JKR Shop had $480, 000 of beginning inventory at cost. In the first quarter of the year, it purchased $1,620, 000 of merchandise, returned $23, 400, and paid freight charges of $37,900 on purchased merchandise, terms FOB shipping point. The company's gross profit averages 25%, and the store had $2,030, 000 of net sales (at retail) in the first quarter of the year. Use the gross profit method to estimate its cost of inventory at the end of the first quarter.

On January 1, JKR Shop had $480, 000 of beginning inventory at cost. In the first quarter of the year, it purchased $1,620, 000 of merchandise, returned $23, 400, and paid freight charges of $37,900 on purchased merchandise, terms FOB shipping point. The company's gross profit averages 25%, and the store had $2,030, 000 of net sales (at retail) in the first quarter of the year. Use the gross profit method to estimate its cost of inventory at the end of the first quarter.

FINANCIAL ACCOUNTING
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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On January 1, JKR Shop had $480,000 of beginning inventory at cost. In the first quarter of the year, it purchased $1,620, 000 of merchandise, returned $23, 400, and paid freight charges of $37,900 on purchased merchandise, terms FOB shipping point. The company's gross profit averages 25%, and the store had $2,030, 000 of net sales (at retail) in the first quarter of the year. Use the gross profit method to estimate its cost of inventory at the end of the first quarter.
Transcribed Image Text:On January 1, JKR Shop had $480,000 of beginning inventory at cost. In the first quarter of the year, it purchased $1,620, 000 of merchandise, returned $23, 400, and paid freight charges of $37,900 on purchased merchandise, terms FOB shipping point. The company's gross profit averages 25%, and the store had $2,030, 000 of net sales (at retail) in the first quarter of the year. Use the gross profit method to estimate its cost of inventory at the end of the first quarter.
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