Jackson 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:

Question

Quizplus · Accepted Answer

To calculate the estimated cost of the ending inventory under the gross profit method, we need to first calculate the cost of goods sold using the gross profit ratio. Given that the gross profit ratio is typically 30%, gross profit can be calculated as ($300,000 x 30%) = $90,000. To get the cost of goods sold, we subtract the gross profit from sales, i.e., ($300,000 - $90,000) = $210,000. Therefore, the cost of ending inventory can be calculated as ($270,000 - $210,000) = $60,000. Hence, the correct answer is option A.

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