Question

The following data are for Steveʹs Candy Store for January: Beginning inventory $191,000 Net sales revenue $620,000 Net purchases $480,000Normal gross profit rate 30% What is the companyʹs estimated ending inventory for the month?

A. $434,000
B. $186,000
C. $237,000
D. $485,000

Answer 1

Answer:

$237,000

Explanation:

Gross profit = $\frac{= Gross profit }{Net sales}$        

Gross profit= 0.3*620,000 = $186,000

Gross profit=Net sales-Cost of goods sold

Cost of goods sold= 620,000-186,000 = $434,000

Cost of goods sold=Beginning inventory + Net purchases- Ending inventory

                 = 434000=191000+480,000- Ending inventory

                Ending inventory=191000+480,000-434000

            =$237,000.