Calculate Estimated Cost of Ending Inventory Using the Gross Profit

question 24

Short Answer

Calculate estimated cost of ending inventory using the gross profit method:
$$\begin{array} { | l | l | } \hline \text { Gross profit on sales } & 40 \% \\\hline \text { Beg inventory Aug 1, 2017 } & \$ 38,000 \\\hline \text { Net purchases } & \$ 9,900 \\\hline \text { Net sales at retail for June } & \$ 27,000 \\\hline\end{array}$$

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Definitions:

Pre-tax Profit

The income that a company has earned before any taxes have been deducted from this amount, also known as earnings before tax.

Cost of Goods Sold

represents the direct costs attributable to the production of the goods sold by a company, including material, labor, and overhead costs.

Other Revenue

Income derived from activities not central to a business's primary operations.

Consolidated Income Statement

A financial document that summarizes the combined income and expenses of a parent company and its subsidiaries.