Sporting Pro wants to prepare interim financial statements for the first quarter of 2023 but would like to avoid making a physical count of inventory. During the last five years, the company’s gross profit rate has averaged 40%. The following information for the year’s first quarter is available from its records:
 

        January 1 beginning inventory $ 315,260   Purchases   960,200   Purchase returns   13,350   Transportation-in   7,200   Sales   1,221,150   Sales returns   9,600  

Required:
Use the gross profit method to prepare an estimate of the company’s March 31 inventory.

Henderson Company uses the gross profit method to estimateending inventory and cost of goods sold when preparing monthlyfinancial statements required by its bank. Inventory on hand at theend of July was $122,500. The following information for the monthof August is available from company records:

Purchases of $219,000

Freight-in of $5,200

Sales of $350,000

Sales returns of $9,000

Purchase returns of $4,300

In addition, the controller is aware of $10,000 of inventorythat was stolen during August from one of the company'swarehouses.

Required:

1) Calculate the estimated inventory at the end ofAugust assuming a gross profit ratioof 30%

2) Calculate the estimated inventory at the end ofAugust, assuming a markup on cost of 25%

Henderson Company uses the ross profit method to estimate endinginventory and cost of goods sold when preparing monthly financialstatements required by its bank. Inventory on hand at the end ofJuly was $122,500. The following information for the month ofAugust is available from company records:

Purchases of $219,000

Freight-in of $5,200

Sales of $350,000

Sales returns of $9,000

Purchase returns of $4,300

In addition, the controller is aware of $10,000 of inventorythat was stolen during August from one of the company'swarehouses.

Required:

1) Calculate the estimated inventory at the end ofAugust assuming a gross profit ratioof 30%

2) Calculate the estimated inventory at the end ofAugust, assuming a markup on cost of 25%