Haley's Florist Shop has the following account balances at the end of the current accounting period. $$\begin{array} { | l | r |}
\hline \text { Beginning inventory } & \$ 53,500 \
\hline \text { Net purchases } & 75,500 \
\hline \text { Net sales revenue } & 93,700 \
\hline
\end{array}$$ A normal gross profit percent is 30%.What is the estimated ending inventory as determined by the gross profit method?

Question

Haley's Florist Shop has the following account balances at the end of the current accounting period. $$\begin{array} { | l | r |} 
\hline \text { Beginning inventory } & \$ 53,500 \
\hline \text { Net purchases } & 75,500 \
\hline \text { Net sales revenue } & 93,700 \
\hline
\end{array}$$ A normal gross profit percent is 30%.What is the estimated ending inventory as determined by the gross profit method?

Quizplus · Accepted Answer

The gross profit is 30% of net sales revenue, or $93,700 x 0.30 = $28,110. The cost of goods sold is net purchases plus beginning inventory, or $75,500 + $53,500 = $129,000. The estimated ending inventory is net sales revenue minus cost of goods sold, or $93,700 - $129,000 = $63,410.

Haley's Florist Shop Has the Following Account Balances at the End