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 $59,800. The following information for the month of November was available from company records:

Purchases $ 123,000

Freight-in 4,300

Sales 245,000

Sales returns 6,000

Purchases returns 5,000

In addition, the controller is aware of $6,000 of inventory that was stolen during November from one of the companys warehouses.

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

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 Less: Stolen inventory Estimated ending inventory 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 Less: Stolen inventory