On March 31 a Company Needed to Estimate Its Ending

question 96

Multiple Choice

On March 31 a company needed to estimate its ending inventory to prepare its first quarter financial statements.The following information is available: Beginning inventory,January 1: $4,000
Net sales: $80,000
Net purchases: $78,000
The company's gross margin ratio is 25%.Using the gross profit method,the cost of goods sold would be:

• A)$60,000.
• B)$20,000.
• C)$58,500.
• D)$63,000.
• E)$19,500.

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Definitions:

Personally Liable

The state of being legally responsible for debts or obligations out of personal assets, not limited to business or corporate assets.

Agent

An individual or entity authorized to act on behalf of another in legal or business matters.

Holder in Due Course

A legal term for a party who has acquired a negotiable instrument in good faith and for value, affording them certain protections.

Promissory Note

A financial document in which one party promises to pay another a specific sum of money at a specified time or on demand.