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E9-12 Astaire Company

Price: $2.50


E9-12 (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.

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