On June 30 a Company Needed to Estimate Its Ending

question 68

Multiple Choice

On June 30 a company needed to estimate its ending inventory to prepare its second quarter financial statements. The following information is available: Beginning inventory, April 1: $6,000
Net sales: $70,000
Net purchases: $36,000
The company's gross margin ratio is 12%. Using the gross profit method, the cost of goods sold would be:

• A)$8,400
• B)$34,000
• C)$61,600
• D)$40,000
• E)$35,200

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Definitions:

Agents

Individuals or entities authorized to act on behalf of others in transactions or negotiations.

Employees

Individuals who work for another person or organization in return for compensation.

Expressed Agency

An agency created in a written or oral agreement. Also called agency by agreement.

Principal

The main party to a transaction, such as a buyer or seller in a contract, or an individual who empowers another (agent) to act on their behalf.