ABC, Inc Began the Year with $250,000 of Inventory and Purchased

question 132

Essay

ABC, Inc. began the year with $250,000 of inventory and purchased $1,500,000 of goods during the year. Sales for the year were $2,750,000 and the gross profit percentage is 45%. Compute the company's estimated cost of ending inventory by using the gross profit method. How can this estimate be checked for accuracy?