GROSS PROFIT METHOD OF ESTIMATING INVENTORY

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Presentation transcript:

GROSS PROFIT METHOD OF ESTIMATING INVENTORY STEP 1 Beginning Inventory, Jan. 1 $238,750.00 Plus net purchases from Jan. 1 to Jan. 31 + 125,450.00 Equals cost of merchandise available for sale $364,200.00 STEP 2 Net sales for Jan. 1 to Jan. 31 $206,250.00 Times previous year’s gross profit percentage  48.00% Equals estimated gross profit on operations $99,000.00 STEP 3 Net sales for Jan. 1 to Jan. 31 $206,250.00 Less estimated gross profit on operations – 99,000.00 Equals estimated cost of merchandise sold $107,250.00 STEP 4 Cost of merchandise available for sale $364,200.00 Less estimated cost of merchandise sold – 107,250.00 Equals estimated ending merchandise inventory $256,950.00 Ending Inventory to Income Statement Lesson 22-3, page 583

GROSS PROFIT METHOD OF ESTIMATING INVENTORY Lesson 22-3, page 583

TERMS REVIEW gross profit method of estimating inventory Lesson 22-3, page 585