TB Nelson Company prepares monthly financial statements and uses the gross profit method to estimate ending inventories.Historically, the company has had a 40% gross profit rate.During June, net sales amounted to $180,000; the beginning inventory on June 1 was $54,000; and the cost of goods purchased during June amounted to $90,000.The estimated cost of TB Nelson Company's inventory on June 30 is

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To estimate the ending inventory using the gross profit method, first calculate the cost of goods sold (COGS) by applying the gross profit rate to net sales. COGS = Net Sales - (Net Sales * Gross Profit Rate) = $180,000 - ($180,000 * 0.40) = $108,000. Then, calculate the cost of goods available for sale: Beginning Inventory + Purchases = $54,000 + $90,000 = $144,000. Finally, estimate the ending inventory: Cost of Goods Available for Sale - COGS = $144,000 - $108,000 = $36,000.

TB Nelson Company Prepares Monthly Financial Statements and Uses the Gross