
On September 30, 2013, the general ledger of Leonʼs Golf Shop, which uses the calendar year as its accounting period, showed the following year-to-date account balances:
The merchandise inventory account had a $48,000 balance on January 1, 2013. The historical gross profit percentage is 40%.
Leon prepares quarterly financial statements and takes physical inventory once a year–at the end of the accounting period. In order to prepare the financial statements for the third quarter, the store needs to have an estimate of ending inventory. You have been asked to use the gross profit method to estimate the ending inventory. Review the worksheet called GP. Study it carefully because it may have a solution format somewhat different from the one shown in your textbook.

Compute the ending inventory using the gross profit method.
Explanation of Solution
Compute the ending inventory using the gross profit method:
Table (1)
The formulae used in the table are given below:
Want to see more full solutions like this?
Chapter 8 Solutions
Excel Applications for Accounting Principles
- Bradford Manufacturing has two products: X and Y. The annual production and sales of Product X is 2,000 units and of Product Y is 1,400 units. The company uses direct labor-hours as the basis for applying all manufacturing overhead to products. • • Product X requires 0.5 direct labor-hours per unit, Product Y requires 0.8 direct labor-hours per unit, The predetermined overhead rate is $72.00 per direct labor-hour. What is the amount of overhead cost that will be allocated to each unit of Product Y?arrow_forwardGeneral accounting questionarrow_forwardCan you please help me this questionarrow_forward
- Danzel Home Goods operates in the household goods industry, where stocks typically have an average P/E ratio of 9.2. Danzel recently reported a net income of $58,000 and has 62,000 shares of common stock outstanding. What is the estimated value of Danzel's stock using this information?arrow_forwardWhat is the estimate value of danzels stock using this information?arrow_forwardWhat is the effective after tax interest expense for the firm?arrow_forward
- Excel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage LearningPrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeFinancial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning

