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Why is the markup of 100% divided by 200? Where is the 200 coming from?

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  1) Assuming Gross profit ratio of 40%:
  Particulars	Amount ($)	Amount ($)
  Beginning inventory		59,000
  Plus: Net Purchases (115,000-6,500)		108500
  Freight-in		3,500
  Cost of goods available for sale		1,71,000
  Less: Cost of goods sold
  Net sales (205,000-7,500)	197500
  Less: Estimated gross profit (197500*40%)	-79000
  Estimated cost of goods sold		-118500
  Estimated cost of inventory before theft		52,500
  Less: Stolen inventory		-10,500
  Estimated ending inventory		42,000

  2) Assuming markup on cost of 100%:
  Particulars	Amount ($)	Amount ($)
  Beginning inventory		59,000
  Plus: Net Purchases (115,000-6,500)		108500
  Freight-in		3,500
  Cost of goods available for sale		1,71,000
  Less: Cost of goods sold
  Net sales (205,000-7,500)	197500
  Less: Estimated gross profit (197500*100/200)	-98750
  Estimated cost of goods sold		-98750
  Estimated cost of inventory before theft		72,250
  Less: Stolen inventory		-10,500
  Estimated ending inventory		61,750

  Comment

Exercise 9-11 Gross profit method [L09-2] Royal Gorge Company uses the gross profit method to estimate ending inventory and cost of goods sold when preparing monthly financial statements required by its bank. Inventory on hand at the end of October was $59,000. The following information for the month of November was available from company records: Purchases Praight-in Sales Sales returns Purchases returns $115,000 3,500 205,000 7.500 6,500 In addition, the controller is aware of $10,500 of Inventory that was stolen during November from one of the company's warehouses. Required: 1. Calculate the estimated Inventory at the end of November, assuming a gross profit ratio of 40% 2. Calculate the estimated Inventory at the end of November, assuming a markup on cost of 100% In addition, the controller is aware of $10,500 of inventory that was stolen during November from one of the company's warehouses. Required: 1. Calculate the estimated Inventory at the end of November, assuming a gross profit ratio of 40% 2. Calculate the estimated Inventory at the end of November, assuming a markup on cost of 100% Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the estimated Inventory at the end of November, assuming a gross profit ratio of 40%. Beginning inventory Plus: Net purchases Freight-in Cost of goods available for sale Less: Cost of goods sold: Net sales Less: Estimated gross profit Estimated cost of goods sold Estimated cost of inventory before theft Less: Stolen inventory Estimated ending inventory LLLLL Required 2 > W Purchase return nts In addition, the controller is aware of $10,500 of Inventory that was stolen during November from one of the company's warehouses. Required: 1. Calculate the estimated Inventory at the end of November, assuming a gross profit ratio of 40%. 2. Calculate the estimated Inventory at the end of November, assuming a markup on cost of 100% Complete this question by entering your answers in the tabs below. Required 2 o Calculate the estimated Inventory at the end of November, assuming a markup on cost of 100% Beginning inventory Plus: Net purchases Freight-in Cost of goods available for sale Less: Cost of goods sold: Not sales Less: Estimated gross profit Estimated cost of goods sold Estimated cost of inventory before theft Less: Stolen inventory Estimated ending inventory

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