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Henderson Company uses the gross profit method to estimate ending inventory and cost of goods sold when preparing monthly financial statements required by its bank. Inventory on hand at the end of July was $126,000. The following information for the month of August was available from company records: Purchases Freight-in Sales Sales returns Purchases returns $ 226,000 5,900 357,000 9,700 5,000 In addition, the controller is aware of $11,000 of inventory that was stolen during August from one of the company's warehouses. Required: 1. Calculate the estimated inventory at the end of August, assuming a gross profit ratio of 35%. 2. Calculate the estimated inventory at the end of August, assuming a markup on cost of 25%. 1. Estimated ending inventory 2. Estimated ending inventory

Henderson Company uses the gross profit method to estimate ending inventory and cost of goods sold when preparing monthly financial statements required by its bank. Inventory on hand at the end of July was $126,000. The following information for the month of August was available from company records: Purchases Freight-in Sales Sales returns Purchases returns $ 226,000 5,900 357,000 9,700 5,000 In addition, the controller is aware of $11,000 of inventory that was stolen during August from one of the company's warehouses. Required: 1. Calculate the estimated inventory at the end of August, assuming a gross profit ratio of 35%. 2. Calculate the estimated inventory at the end of August, assuming a markup on cost of 25%. 1. Estimated ending inventory 2. Estimated ending inventory

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Henderson Company uses the gross profit method to estimate ending inventory and cost of goods sold when preparing monthly financial statements required by its bank. Inventory on hand at the end of July was $126,000. The following information for the month of August was available from company records: Purchases Freight-in Sales Sales returns Purchases returns $ 226,000 5,900 357,000 9,700 5,000 In addition, the controller is aware of $11,000 of inventory that was stolen during August from one of the company's warehouses. Required: 1. Calculate the estimated inventory at the end of August, assuming a gross profit ratio of 35%. 2. Calculate the estimated inventory at the end of August, assuming a markup on cost of 25%. 1. Estimated ending inventory 2. Estimated ending inventory
Transcribed Image Text:Henderson Company uses the gross profit method to estimate ending inventory and cost of goods sold when preparing monthly financial statements required by its bank. Inventory on hand at the end of July was $126,000. The following information for the month of August was available from company records: Purchases Freight-in Sales Sales returns Purchases returns $ 226,000 5,900 357,000 9,700 5,000 In addition, the controller is aware of $11,000 of inventory that was stolen during August from one of the company's warehouses. Required: 1. Calculate the estimated inventory at the end of August, assuming a gross profit ratio of 35%. 2. Calculate the estimated inventory at the end of August, assuming a markup on cost of 25%. 1. Estimated ending inventory 2. Estimated ending inventory
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