2002 Fall Accounting_011_exam_3___Fall_2002___Answers

2002 Fall Accounting_011_exam_3___Fall_2002___Answers -...

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Temple University Fox School of Business and Management Dr. Steven Balsam Accounting 011 Exam #3 November 25, 2002 Instructions: You have 50 minutes. Answer the questions on the pages provided and please remember to show all work so that you may receive partial credit. Also please put your name on each page in case the pages get separated. Good luck!
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Problem 1 (20 points) Office Express is on a 12/31 fiscal year end. At the end of the first quarter they estimate cost of goods sold and ending inventory given the following information: Cost Beginning Inventory 500,000 Purchases 1,000,000 Cost of Goods Available for Sale 1,500,000 Sales 2,000,000 Estimated Gross Profit as a Percentage of Sales 40% Estimate Cost of Goods Sold and Ending Inventory using the Gross Profit Method. Cost of Goods Sold _____________________________ Ending Inventory _____________________________ Answer If Gross Profit as a Percentage of Sales is 40%, then Cost as a Percentage of Sales must be 60% or 1,200,000. Subtracting this amount from Cost of Goods Available for Sale (at Cost) leaves an Ending Inventory of 300,000.
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