Question

In: Accounting

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:

  1. Assuming gross profit is 40% of sales, compute an estimate of Jay Company’s ending inventory.

  2. Assuming gross profit is 40% of cost, compute an estimate of Jay Company’s ending inventory.

Solutions

Expert Solution

a.Gross Profit = 40% of sales

Cost of goods sold = 400,000*60% = $240,000

Beginning Inventory + Purchases - ending inventory = Cost of goods sold

80,000 + 230,000 - ending inventory = 240,000

ending inventory = $70,000

b.Cost of goods sold = 400,000/140% = $285,714.29

Ending Inventory = $24,285.71

ekkarill92 answered 2 years ago
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