St.Paul Corporation has a normal gross profit of 45%.The current year's beginning inventory was $2,500,purchases were $9,000,and retail sales were $15,000.The estimated ending inventory under the gross profit method is:

Question

Quizplus · Accepted Answer

To estimate the ending inventory using the gross profit method, first calculate the cost of goods sold (COGS) using the formula: COGS = Sales - (Sales * Gross Profit %). Here, COGS = $15,000 - ($15,000 * 0.45) = $8,250. Then, calculate the cost of goods available for sale: Beginning Inventory + Purchases = $2,500 + $9,000 = $11,500. Finally, estimate the ending inventory: Cost of Goods Available for Sale - COGS = $11,500 - $8,250 = $3,250.

StPaul Corporation Has a Normal Gross Profit of 45