Gross Profit Method

Royal Gorge Company uses the gross profit method to estimate ending inventory and cost of goods sold when preparing monthly financial statements required by its bank. Inventory on hand at the end of October was $58500. The following information for the month of November was available from company records:

Purchases of $110,000

Freight-in of $3,000

Sales of $180,000

Sales Returns of $5,000

Purchase Returns of $4,000

In addition, the controller is aware of $8,000 of inventory that was stolen during November from one of the company's warehouses.

Required:

2. Using the template below, calculate the estimated inventory at the end of November, assuming a markup on cost of 60%.

Beginning Inventory		58500
Plus: Net purchases		??
Freight-in		3000
Cost of Goods Available for Sale		??
Less: Cost of Goods Sold
Net Sales	??
Less Estimated Gross Profit	??
Estimated Cost of Goods Sold		??
Estimated Inventory before Theft		??
Less: Stolen Inventory		(8000)
Estimated Ending Inventory		??