Featherstone Dollar Stores uses the periodic inventory, and completes a physical count of inventory annually and adjusts inventory to actual at each year end. For quarterly (interim) financial statements, they use the gross profit method to estimate inventory. The average of the actual gross profit margin for the most recent two years is used to estimate the quarter-end inventory. The average gross profit margin for the years ending December 31, 2012 and 2013 was 26%.
For Quarter 1, 2014, the following sales and purchases data is available: Instructions
Prepare Featherstone's multi-step income statement for the three months ended March 31, 2014, and calculate the estimated inventory at March 31, 2014.

Question

Featherstone Dollar Stores uses the periodic inventory, and completes a physical count of inventory annually and adjusts inventory to actual at each year end. For quarterly (interim) financial statements, they use the gross profit method to estimate inventory. The average of the actual gross profit margin for the most recent two years is used to estimate the quarter-end inventory. The average gross profit margin for the years ending December 31, 2012 and 2013 was 26%.
For Quarter 1, 2014, the following sales and purchases data is available:  Instructions
Prepare Featherstone's multi-step income statement for the three months ended March 31, 2014, and calculate the estimated inventory at March 31, 2014.

Quizplus · Accepted Answer

The Answer of Featherstone Dollar Stores uses the periodic inventory, and completes a physical count of inventory annually and adjusts inventory to actual at each year end. For quarterly (interim) financial statements, they use the gross profit method to estimate inventory. The average of the actual gross profit margin for the most recent two years is used to estimate the quarter-end inventory. The average gross profit margin for the years ending December 31, 2012 and 2013 was 26%.
For Quarter 1, 2014, the following sales and purchases data is available:  Instructions
Prepare Featherstone's multi-step income statement for the three months ended March 31, 2014, and calculate the estimated inventory at March 31, 2014.

Featherstone Dollar Stores Uses the Periodic Inventory, and Completes a Physical