Reference no: EM132749237

Question 1 - Gross Profit Method - Each of the following gross profit percentages is expressed in terms of cost.

1. 20%.

2. 25%.

3. 33(1/3)%.

4. 50%.

Instructions - Indicate the gross profit percentage in terms of sales for each of the above.

Question 2 - 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 €160,000

Purchases (gross) 640,000

Freight-in 30,000

Sales 1,000,000

Sales returns 70,000

Purchase discounts 12,000

Instructions - (a) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of sales.

(b) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost.