Lewiston Company is preparing its financial statements. Gross margin is normally 40% of sales. Information taken from the company's records revealed sales of $50,000; beginning inventory of $5,000 and purchases of $35,000. The estimated amount of ending inventory would be:
A)$10,000.
B)$30,000.
C)$20,000.
D)$16,000.

Question

Quizplus · Accepted Answer

$50,000 x (1 - 0.40) = $30,000 estimated cost of goods sold; $5,000 beginning inventory + $35,000 purchases = $40,000 goods available for sale; $40,000 - $30,000 cost of goods sold = $10,000 ending inventory

Lewiston Company Is Preparing Its Financial Statements