Question
In: Accounting
Part A Jay Company provides you with the following information for the current accounting period: ...
Part A
Jay Company provides you with the following information for the current accounting period:
Sales (net) $400,000
Beginning inventory at cost 80,000
Purchases (net) 230,000
Required:
- Assuming gross profit is 40% of sales, compute an estimate of Jay Company’s ending inventory.
- Assuming gross profit is 40% of cost, compute an estimate of Jay Company’s ending inventory.
Solutions
Expert Solution
| a. | |||
| Beginning Inventory | $ 80,000 | ||
| Add: | Purchases | $ 2,30,000 | |
| (i) | Cost of goods available for sale | $ 3,10,000 | |
| Sales | $ 4,00,000 | ||
| Less: | Gross profit ($400000 X 40%) | $ 1,60,000 | |
| (ii) | Cost of goods sold | $ 2,40,000 | |
| (i) - (ii) | Ending Inventory | $ 70,000 | |
| b. | |||
| Beginning Inventory | $ 80,000 | ||
| Add: | Purchases | $ 2,30,000 | |
| (i) | Cost of goods available for sale | $ 3,10,000 | |
| Sales | $ 4,00,000 | ||
| Less: | Gross profit [$400000*[1/(100/40 + 1)]] | $ 1,14,286 | |
| (ii) | Cost of goods sold | $ 2,85,714 | |
| (i) - (ii) | Ending Inventory | $ 24,286 |
ekkarill92 answered 1 year agoRelated Solutions
Jay Company provides you with the following information for the current accounting period:
Part AJay Company provides you with the following information for the
current accounting period:
Sales
(net)
$400,000
Beginning inventory at
cost
80,000
Purchases
(net)
230,000Required:Assuming gross profit is 40% of sales, compute an
estimate of Jay Company’s ending inventory.Assuming gross profit is 40% of cost, compute an
estimate of Jay Company’s ending inventory.
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