Reference no: EM132749237
Question 1 - Gross Profit Method - Each of the following gross profit percentages is expressed in terms of cost.
1. 20%.
2. 25%.
3. 33(1/3)%.
4. 50%.
Instructions - Indicate the gross profit percentage in terms of sales for each of the above.
Question 2 - Gross Profit Method - 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 €160,000
Purchases (gross) 640,000
Freight-in 30,000
Sales 1,000,000
Sales returns 70,000
Purchase discounts 12,000
Instructions - (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.