(Answered) Question - gross profit methodastaire company uses the

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Question - 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 $206,400

Purchases (gross) 825,600

Freight-in 38,700

Sales 1,290,000

Sales returns 90,300

Purchase discounts 15,480

(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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