Problem 5-23A Estimating ending inventory: gross margin method LO 5-4 Toyland wishes to produce quarterly financial statements, but it takes a physical count of Inventory only at year-end. The following historical data were taken from the Year 1 and Year 2 accounting records: Year 1 Year 2 Net sales $150,000 $190,000 Cost of goods sold 89,200 Based on this data, the average historical gross margin percentage (GM%) was 51.4%. (Total Gross Margin of $174,800 / Total net sales of $340,000 = 0.514 = 51.4%). At the end of the first quarter of Year 3. Toyland's ledger had the following account balances: 76,000 Salen Purchases Beginning inventory 1/1/Year 3 Ending inventory 3731/Year 3 $210,000 90,000 32,100 16.000 Based on purchases and sales, the Toyland accountant thinks inventory is low. Required Using the information provided, estimate the following for the first quarter of Year 3: a. Cost of goods sold. (Use the average cost of goods sold percentage) (Round your intermediate percentage values to 1 decimal place and final answer to nearest whole dollar amount.) b. Ending inventory at March 31 based on the historical cost of goods sold percentage c. Inventory shortage Based on purchases and sales, the Toyland accountant thinks inventory is low. Required Using the information provided, estimate the following for the first quarter of Year 3: a. Cost of goods sold. (Use the average cost of goods sold percentage.) (Round your intermediate percentage values to 1 decimal place and final answer to nearest whole dollar amount.) b. Ending inventory at March 31 based on the historical cost of goods sold percentage. C. Inventory shortage Cost of goods sold b. Estimated ending Inventory Estimated Inventory shortage