Fargone Products Began Its Fiscal Year with $38,000 in Inventory

question 13

Multiple Choice

Fargone Products began its fiscal year with $38,000 in inventory at cost and purchased $65,000 of goods during the year. Net sales for the year totalled $150,000. Assuming the company has operated with a 35% average gross profit ratio for a number of years, what is the estimated ending inventory using the gross profit method?

• A) $5,500
• B) $50,500
• C) $103,000
• D) $150,000

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Definitions:

Interest Rate

The interest rate is the percentage charged on the total amount borrowed or invested, representing the cost of borrowing or the earning from an investment over a specified period.

Loan

A financial amount given as a loan, anticipated to be returned with interest.

Rate of Return

The increase or decrease in the value of an investment during a set timeframe, represented as a percent of the investment's original price.

Equivalent Value

The worth of an item, service, or amount in terms of another, often used in comparisons or exchanges.