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Q. Example on gross margin method?
To demonstrate the gross margin method of computing inventory assumes that for several Years Field Company has maintained a 30 per cent gross margin on net sales. The subsequent data for 2010 are available The January 1 inventory was USD 40000 net cost of purchases of merchandise was USD 480000 and net sales of merchandise were USD 700000. As display in Exhibit 63 Field is able to estimate the inventory for 2010 December 31 by deducting the estimated cost of goods sold from the actual cost of goods available for sale.
An alternative format for computing estimated ending inventory uses the standard income statement format and solves for the one unknown (ending inventory)
We recognize that Costs of goods available for sale-Ending inventory=Cost of goods sold
Therefore (let X = Ending inventory) USD 520000 - X = USD 490000
X = USD 30000
The gross margin method isn't precise enough to be used for year-end financial statements. At year-end a physical inventory should be taken and valued by either the FIFO, LIFO, specific identification or weighted-average methods.
In addition, assume that Anheuser-Busch InBev sold 200 million barrels of beer during the year. Assume that variable costs were 75% of the cost of goods sold and 40% of selling,
office supplies on hand at year end amounted to 3000
A company pays rates annually/yearly in advance on 1 April every year. $4000 is paid by them on 1 April 2009 and $4800 on 1 April year 2010. The company's accounting year end is 31
twhat is debit?
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How does contribution margin work?
On June 1st, Green Pea, Inc. purchased $1,200 worth of supplies on account. How does this transaction affect Green Pea's accounts? a. Increase supplies and accounts payable by $
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Q. What is current ratio in terms of accounting? The current ratio specifies the short-term debt-paying ability of a company. To find the current ratio we divide current assets
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