On December 31,a Company Needed to Estimate Its Ending Inventory

question 123

Multiple Choice

On December 31,a company needed to estimate its ending inventory to prepare its annual financial statements.The following information is currently available: Inventory as of January 1: $120,500
Net sales for the year: $400,000
Net purchases for the year: $270,500
This company typically achieves a gross profit ratio of 15%.Ending Inventory under the gross profit method would be:

• A)$102,425.
• B)$10,425.
• C)$9,000.
• D)$51,000.
• E)$51,425.

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