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Calculate the estimated inventory at the end of november

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Reference no: EM132513635

Gross Profit Method

Royal Gorge Company uses the gross profit method to estimate ending inventory and cost of sold when preparing monthly financial statements required by its bank. Inventory on hand at the end of October was $58,500.

The following information for the month of November was available from Company records:

Purchase               $110,000

Freight-in                  3,000

Sales                     180,000

Sales return               5,000

Purchase returns         4,000

  • In addition, the controller is aware of $8,000 of inventory that was stolen during November from one of the company's warehouses.

Required:

Question 1. Calculate the estimated inventory at the end of November, assuming a gross profit ratio of 40%

Question 2. Calculate the estimated inventory at the end of November, assuming a markup on cost of 100%.

Reference no: EM132513635

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