Garden World uses the retail method to estimate its monthly cost of goods sold and month-end inventory. At 31 May, the accounting records indicate the cost of goods available for sale during the month (beginning inventory plus purchases) totaled $540,000. These goods had been priced for resale at $900,000. Sales in May totaled $480,000. The estimated inventory at 31 May is:

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The estimated inventory at 31 May is $252,000. This is calculated as follows:Cost of goods available for sale = $540,000Sales = $480,000Estimated inventory = $540,000 - $480,000 = $252,000

Garden World Uses the Retail Method to Estimate Its Monthly