Computing Gross Profit and Cost Percentages Given Ending Inventory Balances Harris Inc. with a December 31 year-end, applies a periodic inventory system in reporting inventory. Because its physical inventory count take place at year-end, Harris estimates ending inventory for its quarterly reports using the gross profit method. The following information for the first two quarters of 2020 is available for Harris. Inventory, December 31, 2019 (based on physical count) $36,000 Inventory, March 31, 2020 (estimated) 15,000 Inventory, June 30, 2020 (estimated) 47,200 Purchases, First quarter, 2020 100,000 Purchases, Second quarter, 2020 140,000 Net sales, First quarter, 2020 160,000 Net sales, Second quarter, 2020 144,000 Compute the following percentages, rounding answers to the nearest full percentage point; for example, enter 60 for 60.4% or 61 for 60.5%. a. Estimate markup on sales for first quarter 2020. 75.696 x b. Estimate markup on cost for first quarter 2020. 79.396 x c. Estimate markup on sales for second quarter 2020. 096 x d. Estimate markup on cost for second quarter 2020. 096 X Valuing Inventory at Lower-of-Cost-or-Market Gard Inc. has compiled the following information related to its five products. Costs of disposal are estimated to be 10% of selling price, and gross profit is estimated to be 25% of the selling price. Determine the value of inventory applying the lower-of-cost-or-market rule to each individual inventory item. Note: Round each amount to the nearest dollar. #1 #2 #3 #4 #5 $1,300 900 Estimated selling price Original cost (LIFO) Replacement cost Inventory at the lower-of-cost-or-market $ $660 450 500 450 $ $760 480 700 480$ $820 600 490 490 X $ $1,000 630 660 630$ 830 840 X
