Problem:
In Year 1 Pepper Company reported a $40,000 gross margin on $200,000 of sales revenue. In Year 2 Pepper's accounting records showed sales revenue of $220,000 and cost of goods available for sale of $210,000.
Required:
Question: Using the gross margin method of estimating inventory, the estimated amount of ending inventory for Year 2 is
- $84,000.
- $40.000.
- $44,000.
- $34,000.
Note: Please show the work not just the answer.