Dianna Co. prepares monthly income statements. Inventory is counted only at year end; thus, month-end inventories must be estimated. All sales are made on account. The rate of mark-up on cost is 20%. The following information relates to the month of September.
Accounts receivable, September 1 $121,000
Inventory, September 1 147,000
Collections of accounts during September 184,000
Purchases during September 165,000
Accounts receivable, September 30 127,000
Required:
Calculate the estimated cost of the inventory on September 30.

Question

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The Answer of Dianna Co. prepares monthly income statements. Inventory is counted only at year end; thus, month-end inventories must be estimated. All sales are made on account. The rate of mark-up on cost is 20%. The following information relates to the month of September.
Accounts receivable, September 1 $121,000
Inventory, September 1 147,000
Collections of accounts during September 184,000
Purchases during September 165,000
Accounts receivable, September 30 127,000
Required:
Calculate the estimated cost of the inventory on September 30.

Dianna Co Prepares Monthly Income Statements