3 sandhill company a wholesaler budgeted the

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3. Sandhill Company, a wholesaler, budgeted the following sales for the indicated months:
June July August
Sales on account
$2460000 $2520000 $2610000
Cash sales
246000 276000 366000
Total sales
$2706000 $2796000 $2976000
All merchandise is marked up to sell at its invoice cost plus 20 %. Merchandise inventories at the beginning of
each month are at 30 % of that month's projected cost of goods sold.
The cost of goods sold for the month of June is anticipated to be
$2164800.
$2255000.
$1894200.
$2081538.
Solution: (1 + 0. 20 )C = $ 2706000 ; C = $ 2255000 .
4. Wildhorse Company had a gross profit of $605000, total purchases of $822000, and an ending inventory
of $468000 in its first year of operations as a retailer. Wildhorse’s sales in its first year must have been
$1427000.
.

5. Sheridan, Inc. estimates the cost of its physical inventory at March 31 for use in an interim financial
statement. The rate of markup on cost is 20%. The following account balances are available:
Inventory, March 1
$543000
Purchases
423000
Purchase returns
13000
Sales during March
729000
The estimate of the cost of inventory at March 31 would be
6. On January 1, 2020, the merchandise inventory of Sandhill, Inc. was $1400000. During
2020 Sandhill purchased $2804000 of merchandise and recorded sales of $3600000. The gross profit rate on
these sales was 25%. What is the merchandise inventory of Sandhill at December 31, 2020?