Henderson Company uses the gross profit method to estimate ending inventory and cost of goodssold when preparing monthly financial statements required by its bank. Inventory on hand at theend of July was $118,000. The following information for the month of August was available fromcompany records:PurchasesFreight-inSalesSales returns$210,0004,300341,0008,1003,400Purchases returnsIn addition, the controller is aware of $11,000 of inventory that was stolen during August from one ofthe company's warehouses.Required:1. Calculate the estimated inventory at the end of August, assuming a gross profit ratio of 35%.2. Calculate the estimated inventory at the end of August, assuming a markup on cost of 25%.Estimated ending inventoryEstimated ending inventory1.2.

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Description: Henderson Company uses the gross profit method to estimate ending inventory and cost of goodssold when preparing monthly financial statements required by its bank. Inventory on hand at theend of July was $118,000. The following information for the m

1. Beginning Inventory 118,000 Add: Net purchases (210000-3400) 206,600…

Answered: Required: 1. Calculate the estimated…

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Required: 1. Calculate the estimated inventory at the end of August, assuming a gross profit ratio of 35%. 2. Calculate the estimated inventory at the end of August, assuming a markup on cost of 25%.

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter18: Accounting Periods And Methods

Section: Chapter Questions

Problem 67P

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On September 30, 2013, the general ledger of Leons Golf Shop, which uses the calendar year as its accounting period, showed the following year-to-date account balances: The merchandise inventory account had a 48,000 balance on January 1, 2013. The historical gross profit percentage is 40%. Leon prepares quarterly financial statements and takes physical inventory once a yearat the end of the accounting period. In order to prepare the financial statements for the third quarter, the store needs to have an estimate of ending inventory. You have been asked to use the gross profit method to estimate the ending inventory. Review the worksheet called GP. Study it carefully because it may have a solution format somewhat different from the one shown in your textbook.
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