Answer:
$26,000
Explanation:
Beginning inventory, january 1: $4,000
net sales: $80,000
net purchases: $78,000
If the company's gross margin ratio is 25%. using the gross profit method, the estimated ending inventory value would be derived from the formula -
1. Beginning inventory + Purchases - ending inventory = Cost of Goods Sold.
and
2. Sales - Cost of Goods Sold = Gross profit.
Therefore beginning from 2. If the gross profit is 25%, then the Cost of Sales is 75% of Sales value which is 0.7 x $80,000 = $56,000
Therefore going to formula 1 above, and using 56,000 as the value of Cost of goods sold:
Beginning inventory + Purchases - Ending inventory = Cost of Goods Sold. which implies that 4,000+78,000 - ending inventory = $56,000
Therefore ending inventory = 78,000 + 4000 - 56,000 = $26,000
Answer:
$22,000
Explanation:
cost of goods sold = beginning inventory + purchases - ending inventory
COGS = 75% of total sales = 75% x $80,000 = $60,000
$60,000 = $4,000 + $78,000 - ending inventory
ending inventory = $82,000 - $60,000 = $22,000
