Johnson Co. had sales during the most recent accounting period of $100,000. The cost of goods...

Johnson Co. had sales during the most recent accounting period of $100,000. The cost of goods available for sale during this period was $96,000, and the retail selling price for these same goods was $160,000. What is the estimated cost of ending inventory using the retail method?

a. $25,600 c. $36,000
b. $56,000 d. $64,000

Gledhill Products had net sales of $500,000 during the year. Their cost of goods available for sale during the year was $400,000. If the company’s products have an average gross profit of 45 percent, calculate the estimated cost of ending inventory, using the gross profit method.
a. $525,000 c. $ 75,000
b. $125,000 d. $100,000

Expert Solution

In Johnson Co. Case:

Retail Sale Price : 160000 $

Less: Retial COGS: 96000 $

Balance: Closing Stock at Reail price: 64000 $

Correct Option : d.

In Gledhill Products Case:

Sale is : 500000 $

Purchases( Goods available for Sale) : 400000 $

GP Ration ( 45% of Sale) : 225000 $

Hence : Closing Stock = Purchases + GP Ratio - Sales = Clsoing Stock

400000 $ + 225000 $ - 500000 $ = 125000 $

Correct Option : b.

ekkarill92 answered 2 years ago

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