Martinez Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented...
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Accounting
Martinez 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
$ 175,600
Purchases (gross)
617,400
Freight-in
31,700
Sales revenue
973,200
Sales returns
68,100
Purchase discounts
12,900
Part 1
Correct answer iconYour answer is correct.
Compute the estimated inventory at May 31, assuming that the gross profit is 20% of net sales.
The estimated inventory at May 31
$enter the dollar amount of the estimated inventory at May 31
$87,720 (I got correct, but not part 2)
Part 2
Incorrect answer iconYour answer is incorrect.
Compute the estimated inventory at May 31, assuming that the gross profit is 20% of cost. (Round percentage of sales to 2 decimal places, e.g. 78.74% and final answer to 0 decimal places, e.g. 6,225.)
The estimated inventory at May 31
$enter the dollar amount of the estimated inventory at May 31
Answer & Explanation
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