Acc255 week 5 Problem 6-7BB Ernst Equipment Co. wants to prepare interim financial statements for the

Acc255 week 5 Problem 6-7BB Ernst Equipment Co. wants to prepare interim financial statements for the first quarter

Fundamental Accounting Principles: Larson−Wild−Chiappetta, Seventeenth Edition

Problem 6-7BB

P4

Gross profit method

Problem 6-7BB Ernst Equipment Co. wants to prepare interim financial statements for the first quarter.

Ernst Equipment Co. wants to prepare interim financial statements for the first quarter The company wishes to avoid making a physical count of inventory. Ernst’s gross profit rate averages 30%. The following information for the first quarter is available from its records:

January 1 beginning Inventory…………..$752,880

Cost of goods purchased………………...2,159.630

Sales…………………………………… 3,710,250

Sales returns…………………………….. 74,200

Requires

Use the gross profit method to estimate the company’s first quarter ending inventory. SOLUTION

Check Estim, ending inventory

$367,275