Principles of Accounting Volume 1
Principles of Accounting Volume 1
19th Edition
ISBN: 9781947172685
Author: OpenStax
Publisher: OpenStax College
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The Bubba Company uses the gross profit method to
estimate inventory and cost of goods sold for interim
reporting purposes. The average gross profit rate is 25% of
sales. The following data relate to the month of May:
Inventory cost, May 1
$30,000
Purchases during the month at cost $80,400
Sales
Sales returns
$100,800
$3,600
Using the data above, what is the estimated ending
inventory on May 31?
A. $24,300
B. $25,200
C. $34,800
D. $37,500
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Transcribed Image Text:The Bubba Company uses the gross profit method to estimate inventory and cost of goods sold for interim reporting purposes. The average gross profit rate is 25% of sales. The following data relate to the month of May: Inventory cost, May 1 $30,000 Purchases during the month at cost $80,400 Sales Sales returns $100,800 $3,600 Using the data above, what is the estimated ending inventory on May 31? A. $24,300 B. $25,200 C. $34,800 D. $37,500
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