A company has cost of goods available for sale of $250,000,sales of $287,000,and a gross profit percentage of 30 percent.Using the gross profit method,what is the ending inventory?

Question

Quizplus · Accepted Answer

Using the gross profit method formula: 
Sales - Cost of goods sold = Gross profit 
Cost of goods sold = Sales - Gross profit

Since the gross profit percentage is 30%, the cost of goods sold can be calculated as: 
Gross profit = Sales x Gross profit percentage 
Gross profit = $287,000 x 0.30 = $86,100 
Cost of goods sold = $287,000 - $86,100 = $200,900

The ending inventory can be calculated as: 
Cost of goods available for sale - Cost of goods sold = Ending inventory 
Ending inventory = $250,000 - $200,900 = $49,100

Therefore, the answer is C, $49,100.

A Company Has Cost of Goods Available for Sale of $250,000,sales