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Fearless Company reported the following information for Year 1. Net sales $400,000 Beginning inventory 40,000 Purchases, gross 320,000 Freight-in 8,000 Purchase returns 20,000 Fearless Company
Fearless Company reported the following information for Year 1.
| Net sales | $400,000 |
| Beginning inventory | 40,000 |
| Purchases, gross | 320,000 |
| Freight-in | 8,000 |
| Purchase returns | 20,000 |
Fearless Company typically earns a 20% gross profit margin.
Estimate the inventory balance on December 31, Year 1 using the gross profit method.
| $12,000 | ||
| $20,000 | ||
| $28,000 | ||
| $68,000 |
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