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:

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Quizplus · Accepted Answer

The gross profit ratio is 30%, meaning the cost of goods sold (COGS) ratio is 70% (100% - 30%). Sales are $300,000, so COGS is 70% of that, which is $210,000 ($300,000 * 70%). The cost of goods available for sale is $270,000. Subtracting the COGS ($210,000) from the cost of goods available for sale ($270,000) gives the estimated ending inventory of $60,000.

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