E9-12 CH9 - E9-12 (Gross Profit Method) Astaire Company...

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Unformatted text preview: E9-12 (Gross Profit Method) Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May. Inventory, May 1 $180,800 Purchases (gross) 723,200 Freight-in 33,900 Sales 1,130,000 Sales returns 79,100 Purchase discounts 13,560 Co ( mpu a te ) he t esti mat ed inve ntor y at Ma y 31, assu min g that the gros s prof it is 25 % of sale s. (b) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost. (a) Inventory, May 1 (at cost) Purchases (gross) (at cost) $180,800 723,200 Purchase discounts Freight-in Goods available (at cost) Sales (at selling price) Sales returns (at selling price) Net sales (at selling price) Less gross profit (25% of $1,050,900) Sales (at cost) Approximate inventory, May 31 (at cost) (b) (13,560) 33,900 924,340 $1,130,000 (79,100) 1,050,900 262,725 788,175 $136,165 Gross profit as a percent of sales must be computed: 25% = 20% of sales 100% + 25% Inventory, May 1 (at cost) Purchases (gross) (at cost) Purchase discounts Freight-in Goods available (at cost) Sales (at selling price) Sales returns (at selling price) Net sales (at selling price) Less gross profit (20% of $1,050,900) Sales (at cost) Approximate inventory, May 31 (at cost) $180,800 723,200 (13,560) 33,900 924,340 $1,130,000 (79,100) 1,050,900 210,180 840,720 $83,620 ...
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This note was uploaded on 11/30/2011 for the course ACC 101 taught by Professor B during the Fall '09 term at CUNY Baruch.

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E9-12 CH9 - E9-12 (Gross Profit Method) Astaire Company...

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