27th Edition
WARREN + 5 others
ISBN: 9781337272094




27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Gross profit method

Based on the following data, estimate the cost of the ending merchandise inventory:

Sales $9,250,000
Estimated gross profit rate 36%
Beginning merchandise inventory $ 180,000
Purchases (net) 5,945,000
Merchandise available for sale $6,125,000

To determine

Gross profit method

This method is use the estimated gross profit for the period to evaluate and ascertain the ending inventory for the period. The gross profit for the period is calculated from the preceding year, which is adjusted for any current period changes in the sales and cost price of the inventory.

To estimate: cost of ending merchandise inventory.


The estimated cost of merchandise sold is calculated by deducting the estimated gross profit from the sales. The estimated gross profit is determine...

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