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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Definitions:

Inflation Rate

The percentage increase in the price level of goods and services in an economy over a period of time, typically measured on an annual basis.

Government Control

Government control refers to the mechanisms, regulations, and actions taken by a government to oversee, direct, or manage its country's economic activities, industries, or individual behavior.

Public Outlays

Government spending or expenditure, including costs on public services, infrastructure, and social welfare programs.

Natural Resources

Naturally occurring materials or commodities valuable for their intrinsic properties and used by humans for production, such as minerals, forests, and water bodies.