Exercise 9-14

MartinezCompany uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May.

Inventory, May 1 $174,100, Purchases (gross) $688,900, Freight-in $27,300

Sales revenue $995,000, Sales returns $73,400. Purchase discounts $11,600.

Compute the estimated inventory at May 31, assuming that the gross profit is 25% of net sales.

The estimated inventory at May 31 = $

Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost.(Round percentage of sales to 2 decimal places, e.g. 78.74% and final answer to 0 decimal places, e.g. 6,225.)

The estimated inventory at May 31= $