learning objective 6 8 1 the estimated ending merchandise inventory can be computed 4306733

learning objective 6 8 1 the estimated ending merchandise inventory can be computed 4306733

Learning Objective 6-8

1) The estimated ending merchandise inventory can be computed by subtracting cost of goods sold from the cost of goods available for sale.

2) Gross profit is calculated by dividing sales revenue by cost of goods sold.

3) The gross profit method is a way to estimate ending inventory on the basis of the cost of goods sold model.

4) A way to estimate the cost of ending merchandise inventory on the basis of the ratio of the goods available for sale at cost to the goods available for sale at retail is called the gross profit method.

5) James Inc. earned revenue of $500,000 and incurred cost of goods sold of $100,000. What is the gross profit percent?

A) 80%

B) 20%

C) 100%

D) 40%

6) Rubal Inc. earned revenue of $400,000 and incurred cost of goods sold of $320,000. Calculate the gross profit percent.

A) 75%

B) 20%

C) 60%

D) 80%

7) The beginning inventory of Soft Toys Inc. was $46,000. The purchases (excluding returns) and sales revenue for the year were $230,000 and $325,000, respectively. The purchase returns amounted to $30,000. The company's normal gross profit percent is 60%. What is the amount of the estimated ending inventory?

A) $72,000

B) $246,000

C) $30,000

D) $116,000

8) Susan Florists had the following account balances at the end of the current accounting period:

Beginning inventory

$53,500

Net purchases

75,500

Net sales revenue

93,700

A normal gross profit percent is 30%. What is the estimated ending inventory as per the gross profit method?

A) $100,890

B) $28,110

C) $63,410

D) $65,590

9) Golden Oak Inc. had the following account balances at the end of the current accounting period:

Beginning inventory

$73,000

Net purchases

58,250

Net sales revenue

87,500

The normal gross profit for the company is 45%. What was the company's estimated cost of goods sold for the accounting period?

A) $40,150

B) $32,038

C) $48,125

D) $39,375

10) Collins Computers stored its inventory in a warehouse that was destroyed by a fire in late November, 2014. Its sales office was at a different location. In order to file a claim with the insurance company, the company's manager asks you to estimate the inventory in the warehouse. The following information is available:

Beginning inventory for November

$375,500

Purchases through November 30

470,250

Net sales revenue through November 30

793,000

The company's gross profit has historically been 40% of Net sales revenue. Estimate the value of the inventory destroyed in the fire using the gross profit method.

A) $369,950

B) $528,550

C) $410,000

D) $388,450

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