Chapter 10, Problem 10.14E

Gross Profit Method. A tsunami destroyed Kyoto Company’s warehouse and all of its inventory Kyoto’s prior-year balance sheet reported ending inventory totaling $5,097. Kyoto’s management believes that last year’s gross profit percentage is a good estimate of the gross profit in the current year. Kyoto’s sales last year were $48,540 and its cost of goods sold was $27,490. Before the tsunami Kyoto’s net sales were $28,903 and Kyoto purchased $18,005 of inventory. Of the inventory purchased, $45 had not yet been delivered to Kyoto. Round percentages to one decimal place Use the gross profit method to determine the following:

Required

1. a. What is Kyoto’s historical gross profit percentage?
2. b. What is Kyoto’s estimated cost of goods sold?
3. c. What is Kyoto’s estimated gross profit?
4. d. What is Kyoto’s estimated ending inventory?