Please Show the formulas. Thank you.

P8 GROSS PROFIT METHOD (GP) LEARNING OBJECTIVES . . Use the gross profit method to estimate ending inventory. Identify reasons for differences between book and physical inventories. Interpret trends in the gross profit ratio. Alter the worksheet to include a new input category. Create a chart demonstrating the relationship between gross profit percentage and estimated ending inventory. . . PROBLEM DATA On September 30, 2013, the general ledger of Leon's Golf Shop, which uses the calendar year as its accounting period, showed the following year-to-date account balances: Sales Sales returns and allowances Purchases Purchases returns and allowances $325,000 9,000 225,000 11,000 The merchandise inventory account had a $48,000 balance on January 1, 2013. The historical gross profit percentage is 40%. REQUIREMENT 1. Leon prepares quarterly financial statements and takes physical inventory once a year-at the end of the accounting period. In order to prepare the financial statements for the third quarter, the store needs to have an estimate of ending inventory. You have been asked to use the gross profit method to estimate the ending inventory. Review the worksheet called GP. Study it carefully because it may have a solution format somewhat different from the one shown in your textbook. 2. Open the file GP from the website for this book at cengagebrain.com. Enter all the formulas where indicated on the worksheet. Enter your name in cell A1. Save your completed worksheet as GP2. Print the worksheet. Also print your formulas. Check figure: Estimated ending inventory (cell D23), $72,400. 3. On December 31, 2013, the year-to-date account balances of selected accounts were as follows: Sales Sales returns and allowances Purchases Purchases returns and allowances $490,000 13,000 280,000 15,000 Estimated ending merchandise inventory at December 31, 2013, is $ 4. A physical count of merchandise inventory on December 31, 2013, revealed inventory costing $22,000. In the space below, list at least two possible reasons for this balance to be different from the estimate computed in requirement 3. CHART ANALYSIS 5. Click the Chart sheet tab. The line chart that appears plots quarterly sales and actual gross profit for all four quarters. Examine the pattern of behavior for these two items and comment on any favorable or unfavorable trends noted. What is happening to the gross profit ratio? When the assignment is complete, close the file without saving it again. TICKLERS (optional) Worksheet. At the present time, Leon's Golf Shop includes payments for freight costs in the purchases account. On the advice of an accountant, Leon will establish a separate account for freight-in charges (also called transportation-in) in 2014. Modify the GP2 worksheet to accept this additional item of input. Then estimate ending merchandise inventory at March 31, 2014, using the following data: Sales $150,000 7,500 125,000 9,600 Sales returns and allowances Purchases Purchases returns and allowances Freight-in Beginning inventory (12/31/13) Gross profit percentage (historical) 2,200 22,000 39% Clipboard Font Alignment Number D22 FORMULA C D E F G H GP Gross Profit September 30, 2013 $325,000 9,000 225,000 11,000 48,000 40% 1 2 3 4 5 Data Section 6 7 For the quarter ended 8 Sales 9 Sales returns and allowances 10 Purchases 11 Purchases returns and allowances 12 Beginning inventory 13 Gross profit percent (historical) 14 15 Answer Section 16 17 Beginning inventory 18 Net purchases 19 Cost of goods available for sale 20 Net sales 21 Estimated gross profit (in dollars) 22 Estimated cost of goods sold 23 Estimated ending inventory 24 25 26 27 28 29 30 31 FORMULA1 FORMULA2 FORMULA3 FORMULA4 FORMULA5 FORMULA6 FORMULA7