Lotus Tire Company estimates its ending inventory for its quarterly financial statements by using the gross profit method. The following information is available from its accounting records:

First Quarter Second Quarter Inventory, Jan. | $30,000 Purchases 38,000 $50,000 Purchases returns 3,000 5,000 Sales 70,000 80,000 Sales returns 3,000 2,000 The company uses a gross profit percentage of 30% of net sales.
Required: (1) Compute the cost of goods sold and the ending inventory for each quarter.
(2) How would your answer for the second quarter change if the company’s gross profit percentage dropped to 28% for that quarter?

 TYK-1