Bert Logistics has the following company information for August: goods available for sale at cost are $19,000, retail is $28,500, and sales at retail equal $21,500. Bert has a normal gross profit of 35%. The cost of estimated ending inventory under the gross profit method is: (Round any percentages to two decimal places, X.XX%, and your final answer to the nearest dollar.)

Question

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The gross profit method estimates the cost of ending inventory by applying the gross profit margin to sales, then subtracting this amount from the goods available for sale at cost. First, calculate the cost-to-retail percentage: Cost = $19,000, Retail = $28,500, so the cost-to-retail percentage is $19,000 / $28,500 = 0.6667 or 66.67%. Next, calculate the estimated cost of goods sold: Sales at retail = $21,500, with a normal gross profit of 35%, the cost percentage is 100% - 35% = 65%. However, we use the cost-to-retail percentage directly to find the cost of goods sold from the retail sales. Estimated cost of goods sold = Sales at retail * cost-to-retail percentage = $21,500 * 66.67% = $14,333.85 (approximately). Finally, estimate the ending inventory at cost: Goods available for sale at cost = $19,000, Estimated cost of goods sold = $14,333.85, Estimated ending inventory = $19,000 - $14,333.85 = $4,666.15, rounded to the nearest dollar is $4,666. However, given the options, my calculation does not exactly match any of the provided choices, indicating a potential mistake in my explanation or a misunderstanding of the question's requirements. The correct approach involves applying the gross profit margin to determine the cost of goods sold and then calculating the ending inventory, but the exact figures provided in the options suggest a different calculation or rounding method might have been expected. Re-evaluating with the correct method: Sales at retail = $21,500, Gross profit = 35%, thus, Cost of goods sold (at retail) = 65% of sales (since cost + profit = sales, and if profit is 35%, cost is 65%). However, to accurately reflect the method and given the options, there seems to be a misunderstanding in the calculation process. The correct method involves using the gross profit to find the cost of goods sold and then subtracting this from the goods available for sale, but without the exact steps leading to one of the provided choices, there's a discrepancy in the explanation.

Bert Logistics Has the Following Company Information for August: Goods