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 $60,100. The following information for the month of November was available from company records:

Purchases	$	126,000
Freight-in		4,600
Sales		260,000
Sales returns		7,500
Purchases returns		6,500

In addition, the controller is aware of $7,500 of inventory that was stolen during November from one of the companys warehouses.

1.	Calculate the estimated inventory at the end of November, assuming a gross profit ratio of 40%.

Beginning inventory

Plus: Net purchases

Freight-in

Cost of goods available for sale

Less: Cost of goods sold:

Net sales

Less: Estimated gross profit

Estimated cost of goods sold

Estimated cost of inventory before theft

Less: Stolen inventory

Estimated ending inventory

2.			Calculate the estimated inventory at the end of November, assuming a markup on cost of 100%
		Beginning inventory
		Plus: Net purchases
		Freight-in
		Cost of goods available for sale
		Less: Cost of goods sold:
		Net sales
		Less: Estimated gross profit
		Estimated cost of goods sold
		Estimated cost of inventory before theft
		Less: Stolen inventory
		Estimated ending inventory