Acc225 Fundamental Accounting Principles: P6-7B Ernst Equipment Co. wants to prepare interim

Acc225 Fundamental Accounting Principles

Problem 6-7B Gross profit method
Ernst Equipment Co. wants to prepare interim financial statements for the first quarter. The company wishes to avoid making a physical count of inventory. Ernst’s gross profit rate averages 30%. The following information for the first quarter is available from its records:
January 1 beginning inventory 752,880
Cost of goods purchased 2,159,630
Sales 3,710,250
Sales returns 74,200

Required
Use the gross profit method to estimate the company’s first quarter ending inventory.
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