Concept Introduction:
Gross Profit method: Gross Profit method is used to estimate the value of ending inventory and cost of goods sold. Under this method a gross profit ratio is used to calculate the estimated cost of the inventory. Following formulas are used to derive the cost of ending inventory:
The formula for gross profit ratio is as follows:
The formula to calculate the Cost of goods sold is as follows:
Requirement-a:
To Calculate:
The Gross Profit Ratios of Campbell Soup Company for past three years.
Concept Introduction:
Concept Introduction:
Gross Profit method: Gross Profit method is used to estimate the value of ending inventory and cost of goods sold. Under this method a gross profit ratio is used to calculate the estimated cost of the inventory. Following formulas are used to derive the cost of ending inventory:
The formula for gross profit ratio is as follows:
The formula to calculate the Cost of goods sold is as follows:
Requirement-b:
To Calculate:
The Estimated Gross Profit and Cost of Goods Sold for the first four months of the year 2015
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Chapter 9 Solutions
Accounting: What the Numbers Mean
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