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

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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 ( a ) Co mpu te the 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) $180,800 Purchases (gross) (at cost) 723,200
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Purchase discounts (13,560) Freight-in 33,900 Goods available (at cost) 924,340 Sales (at selling price) $1,130,000 Sales returns (at selling price)
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