Susan Florists had 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 per the gross profit method?

Question

Susan Florists had 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 per the gross profit method?

Quizplus · Accepted Answer

The estimated cost of goods sold (COGS) is 70% of net sales revenue (100% - 30% gross profit), which is $65,590. The cost of goods available for sale is $129,000 ($53,500 beginning inventory + $75,500 net purchases). The estimated ending inventory is $63,410 ($129,000 - $65,590 COGS).

Susan Florists Had the Following Account Balances at the End