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Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

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BuyFindarrow_forward

Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

Omni Fitness Equipment, Inc., maintains a gross margin of 55% on all its weight training products. In April, Omni had a beginning inventory of $146,000. net purchases of $206,000, and net sales of $437,000. Use the gross profit method to estimate the cost of ending inventory.

To determine

To calculate: The cost of ending inventory for April, with the help of gross profit method. Given that, Omni Fitness Equipment, Inc., maintains a gross margin of 55% on all its weight training products. In April, the company had a beginning inventory of $146,000, net purchase of $208,000, and net sales of $437,000.

Explanation

Given Information:

The provided information is:

gross margin = 55%beginning inventory = $146,000net purchase = $208,000net sales = $437,000

Formula used:

Step 1: Relation between Goods available for sale with beginning inventory and net purchased is given by:

Goods Available for Sale = Beginning Inventory + Net Purchased

Step 2: Estimated cost of goods sold is given by:

Estimated cost of goods sold = Net sales (100% Gross margin%)

Step 3: Estimated ending inventory is given by:

Estimated ending inventory = Goods available for saleEstimated cost of goods sold

Calculation:

Consider the provided information:

gross margin = 55%beginning inventory = $146,000net purchase = $208,000net sales = $437,000

List the beginning inventory and purchases and calculate the goods available for sale

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