Question
In: Accounting
1. The net sales for Windmill Boatworks from January 1 until June 30 amount to...
1. The net sales for Windmill Boatworks from January 1 until June 30 amount to $460,000. Gross profit has historically been 30% of net sales. Goods available for sale from January 1 until June 30 amount to $400,000. What is the estimated cost of the inventory on June 30 based on the gross profit method?
Solutions
Expert Solution
Cost of Goods Available for Sale = Beginning value of inventory + Cost of goods produced or purchased in that period
And Cost of Goods Sold= Cost of Goods Available for Sale - Ending value of inventory.
As we know,
| Net sales | 4,60,000.00 | Given |
| Cost of goods sold | 3,22,000.00 | Balancing figure (Net sales- gross profit) |
| Gross profit | 1,38,000.00 | 30% of net sales |
Since Cost of Goods Sold= Cost of Goods Available for Sale - Ending value of inventory.
where, Cost of goods sold= $ 322,000
Goods available for Sale = $ 400,000
Therefore, Cost of Goods Sold= Cost of Goods Available for Sale - Ending value of inventory.
$ 322,000 = $400,000- Ending value of inventory
Ending
value of inventory = $400,000- $ 322,000
Ending
value of inventory = $ 78,000
Hence, cost of inventory on June 30 = $ 78,000
ekkarill92 answered 1 year agoRelated Solutions
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