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12 October, 18:18

Gross Profit MethodBased on the following data, estimate the cost of the ending merchandise inventory:Sales (net) $1,450,000Estimated gross profit rate 42%Beginning merchandise inventory $100,000Purchases (net) 860,000Merchandise available for sale $960,000Cost of Ending Merchandise InventoryMerchandise available for sale $Less cost of merchandise sold Estimated ending merchandise inventory $

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  1. 12 October, 18:39
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    Ending inventory = $119,000

    Explanation:

    Giving the following information:

    Sales (net) $1,450,000

    Estimated gross profit rate of 42%

    Beginning merchandise inventory $100,000

    Purchases (net) 860,000

    Merchandise available for sale $960,000

    Cost of goods sold = 1,450,000*0.58 = 841,000

    Ending inventory = 960,000 - 841,000 = 119,000
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