Jefferson Company has sales of $300,000 and cost of goods available for sale of $270,000. If the gross profit ratio is typically 30%, the estimated cost of the ending inventory under the gross profit method would be:

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Quizplus · Accepted Answer

The gross profit ratio is 30%, so the cost of goods sold (COGS) is 70% of sales. COGS = 70% of $300,000 = $210,000. The cost of goods available for sale is $270,000, so the estimated ending inventory is $270,000 - $210,000 = $60,000.

Jefferson Company Has Sales of $300,000 and Cost of Goods