Estimate the cost of the ending inventory and the cost of sales using the gross margin method. Show all calculations Required: Solution XA8-20 Gross Margin Method: The manager of Seaton Books Ltd., a book retailer, requires an estimate of the inventory cost for a quarterly financial report to the owner on 31 March 20X5. In the past, the gross margin method was used because of the difficulty and expense of taking a physical inventory at interim dates. The company sells both fiction and nonfiction books. Due to their lower turnover rate, nonfiction books are typically marked up to produce a gross profit of 37.5%. Fiction, on the other hand, generates a 28.6% gross profit. The manager has used the average gross profit of 33.333% to estimate interim inventories. v. You have been asked by the manager to estimate the book inventory cost as of 31 March 20X5. The following data are available from Seaton's accounting records