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Question - Whispering Winds Company Limited, which follows ASPE, uses the gross profit method to estimate inventory for monthly reports. Information follows for the month of May:
Inventory, May 1 $359,000
Purchases 723,000
Freight-in 51,000
Sales 1,270,000
Sales returns 75,600
Purchase discounts 12,100
Required -
1. Calculate the estimated inventory at May 31, assuming that the gross profit is 25% of sales.
2. Calculate the estimated inventory at May 31, assuming that the markup on cost is 25%.
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