Question - Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May.
Inventory, May 1
|
$ 172,600
|
Purchases (gross)
|
659,300
|
Freight-in
|
31,300
|
Sales
|
1,077,700
|
Sales returns
|
76,900
|
Purchase discounts
|
12,770
|
(a) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of sales.
(b) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost.