On January 1, 2017, the merchandise inventory of Shoesmith Corp.was $600,000.During 2017, Shoesmith purchased $1,150,000 of merchandise and recorded sales of $1,350,000.The gross profit rate on these sales was 35%.What is the estimated dollar value of the inventory at December 31?
A)$877,500
B)$872,500
C)$562,500
D)$472,500

Question

Quizplus · Accepted Answer

Beginning inventory = $600,000
Purchases = $1,150,000
Cost of goods available for sale = $1,750,000
Gross profit rate = 35%
Sales = $1,350,000
Gross profit = $472,500
Cost of goods sold = $877,500
Ending inventory = $600,000 + $1,150,000 - $877,500
Ending inventory = $872,500

On January 1, 2017, the Merchandise Inventory of Shoesmith Corp