St.Paul Corporation has a normal gross profit of 35%.The current year's beginning inventory was $3,500,purchases were $10,000,and retail sales were $16,000.The estimated ending inventory under the gross profit method is:

Question

Quizplus · Accepted Answer

Beginning inventory = $3,500 
Purchases = $10,000 
Goods available for sale = $13,500 ($3,500 + $10,000)

Gross profit = 35% of retail sales = 0.35 x $16,000 = $5,600

Cost of goods sold = $16,000 - $5,600 = $10,400

Ending inventory = Goods available for sale - Cost of goods sold 
Ending inventory = $13,500 - $10,400 = $3,100

Therefore, the estimated ending inventory under the gross profit method is $3,100.

StPaul Corporation Has a Normal Gross Profit of 35