As a result of taking a physical inventory count on December 31, 2014, the Mona Lisa Company inventory was determined to be $61,500. The auditors for Mona Lisa suspected an inventory shortage and used the gross profit method to estimate the ending inventory. The accounting records for the company contained the following information: $\begin{array}{ll}
\$ 130,000 & \text { Inventory }(1 / 1 / 14) \
760,000 & \text { Purchases (2014) } \
1,020,000 & \text { Sales (2014) } \
60,000 & \text { Sales returns (2014) } \
25 \% \text { of sales } & \text { Gross profit ratio }
\end{array}$
Using the gross profit method, what did the auditors estimate as the amount of the inventory that should have been on hand at December 31, 2014?

Question

As a result of taking a physical inventory count on December 31, 2014, the Mona Lisa Company inventory was determined to be $61,500. The auditors for Mona Lisa suspected an inventory shortage and used the gross profit method to estimate the ending inventory. The accounting records for the company contained the following information: $\begin{array}{ll}
\$ 130,000 & \text { Inventory }(1 / 1 / 14) \
760,000 & \text { Purchases (2014) } \
1,020,000 & \text { Sales (2014) } \
60,000 & \text { Sales returns (2014) } \
25 \% \text { of sales } & \text { Gross profit ratio }
\end{array}$
 Using the gross profit method, what did the auditors estimate as the amount of the inventory that should have been on hand at December 31, 2014?

Quizplus · Accepted Answer

The Answer of As a result of taking a physical inventory count on December 31, 2014, the Mona Lisa Company inventory was determined to be $61,500. The auditors for Mona Lisa suspected an inventory shortage and used the gross profit method to estimate the ending inventory. The accounting records for the company contained the following information: $\begin{array}{ll}
\$ 130,000 & \text { Inventory }(1 / 1 / 14) \
760,000 & \text { Purchases (2014) } \
1,020,000 & \text { Sales (2014) } \
60,000 & \text { Sales returns (2014) } \
25 \% \text { of sales } & \text { Gross profit ratio }
\end{array}$
 Using the gross profit method, what did the auditors estimate as the amount of the inventory that should have been on hand at December 31, 2014?

As a Result of Taking a Physical Inventory Count on December