Babyland wishes to produce quarterly financial statements, but it takes a physical count of inventory only at year end. The following historical data were taken from the 2013 and 2014 accounting records:

At the end of the first quarter of 2015, Babyland’s ledger had the following account balances:

Based on purchases and sales, the Babyland accountant thinks inventory is low.

Required
Using the information provided, estimate the following for the first quarter of 2015:
a. Cost of goods sold. (Use the average cost of goods sold percentage.)
b. Ending inventory at March 31.
c. What could explain the difference between actual and estimatedinventory?

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2013 2014 Net sales $120,000 $140,000 Cost of goods sold 62,000 65,300 Sales Purchases Beginning inventory 1/1/2015 Ending inventory 3/31/2015 $160,000 90,000 24,500 19,000