On December 31, a Company Needed to Estimate Its Ending

question 30

Multiple Choice

On December 31, a company needed to estimate its ending inventory to prepare its fourth quarter financial statements. The following information is currently available: Inventory as of October 1: $12,500
Net sales for fourth quarter: $40,000
Net purchases for fourth quarter: $27,500
This company typically achieves a gross profit ratio of 15%. Ending Inventory under the gross profit method would be:

• A) $4,000.
• B) $6,000.
• C) $10,000.
• D) $16,000.
• E) $34,000.

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