Adams Inchas the Following Account Balances at the End of the the Current

question 107

Multiple Choice

Adams Inc.has the following account balances at the end of the current accounting period. The normal gross profit percent is 40%.What is the estimated ending inventory as determined by the gross profit method?

• A)$190,000
• B)$415,000
• C)$196,000
• D)$490,000

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Definitions:

Merchandise Inventory

Goods that a company holds for the purpose of resale in the ordinary course of business, often considered as current assets on the balance sheet.

Cost of Goods Sold

Expenses directly arising from the production of goods a company offers for sale, involving labor and materials.

Direct Costs

Costs that can be traced directly to the production of specific goods or services, such as raw materials and labor.

Direct Manufacturing Cost

Expenses directly associated with the production of goods, including labor and materials.