On March 31 a Company Needed to Estimate Its Ending

question 168

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 estimated ending inventory value would be:

• A)$82,000.
• B)$60,000.
• C)$20,000.
• D)$22,000.
• E)$19,500.

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Definitions:

Monthly Sales

Monthly sales are the total sales revenue a company generates within a specific month.

Sales Commissions

Remuneration given to sales staff based on the total amount of sales they generate, aimed at motivating higher sales output.

Monthly Sales

The total revenue generated from the sale of goods or services within a specific month.

Net Operating Income

is the total profit of a business after deducting operating expenses but before subtracting taxes and interest.