Mae's Market Place 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 2011 and 2012 accounting records:

At the end of the first quarter of 2013, Mae's ledger had the following account balances:

Based on purchases and sales, Mae thinks her inventory is low.
Required
Using the information provided, estimate the following for the first quarter of 2013:

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 estimated inventory?

Transcribed Image Text:

2011 2012 Net sales $60,000 $70,000 Cost of goods sold 31,000 36,500