Question

Presented below is information related to Splish Corporation for the current year.

Beginning inventory		$ 589,800
Purchases		1,503,500
Total goods available for sale				$2,093,300
Sales revenue				2,410,000

Compute the ending inventory, assuming that (a) gross profit is 43% of sales, (b) gross profit is 60% of cost, (c) gross profit is 33% of sales, and (d) gross profit is 25% of cost. (Round ratios for computational purposes to 1 decimal place, e.g. 78.7% and final answers to 0 decimal places, e.g. 28,987.)

				Ending Inventory
(a)		Gross profit is 43% of sales		$
(b)		Gross profit is 60% of cost		$
(c)		Gross profit is 33% of sales		$
(d)		Gross profit is 25% of cost		$

Answer 1

(a)

Gross profit is 43% of sales

Gross Profit = Sales revenue * 43%

= $2,410,000 * 43%

= $1,036,300

Ending inventory = Cost of goods available for sale - Cost of goods sold

= Cost of goods available for sale - (Sales - Gross profit)

= $2,093,300 - ($2,410,000 - $1,036,300)

= $2,093,300 - $1,373,700

= $719,600

(b)

Gross profit is 60% of Cost.

Gross profit on sales = 60/ (100+60) = 37.5%

Gross Profit = Sales revenue * 37.5%

= $2,410,000 * 37.5%

= $903,750

Ending inventory = Cost of goods available for sale - Cost of goods sold

= Cost of goods available for sale - (Sales - Gross profit)

= $2,093,300 - ($2,410,000 - $903,750)

=  $2,093,300 - $1,506,250

= $587,050

(c)

Gross Profit = Sales revenue * 33%

= $2,410,000 * 33%

= $795,300

Ending inventory = Cost of goods available for sale - Cost of goods sold

= Cost of goods available for sale - (Sales - Gross profit)

= $2,093,300 - ($2,410,000 - $795,300)

= $2,093,300 - $1,614,700

= $478,600

(d)

Gross profit is 25% of Cost.

Gross profit on sales = 25/ (100+25) = 20%

Gross Profit = Sales revenue * 20%

= $2,410,000 * 20%

= $482,000

Ending inventory = Cost of goods available for sale - Cost of goods sold

= Cost of goods available for sale - (Sales - Gross profit)

= $2,093,300 - ($2,410,000 - $482,000)

= $2,093,300 - $1,928,000

= $165,300