Question

In: Accounting

Jefferson Company has sales of $320,000 and cost of goods available for sale of $272,100. If...

Jefferson Company has sales of $320,000 and cost of goods available for sale of $272,100. If the gross profit ratio is typically 30%, the estimated cost of the ending inventory under the gross profit method would be:

  • $96,200

  • $48,100

  • $176,100

  • $47,900

  • $96,000

Solutions

Expert Solution

Gross profit ratio = Gross profit / net sales

0.30 = Gross profit / 320,000

Gross profit = 320,000* 0.30

Gross profit = 96,000

Cost of goods sold = 320,000 - 96,000 = 224,000

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

Ending inventory = 272,100 - 224,000 = $48,100

So, Ending inventory = $48,100

ekkarill92 answered 2 years ago
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