Intermediate Accounting
3rd Edition
ISBN: 9780136912644
Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella
Publisher: Pearson Education (US)
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Textbook Question
Chapter 10, Problem 10.17E
Gross Profit Method. A tsunami destroyed Kyoto Company’s warehouse and all of its inventory Kyoto’s prior-year balance sheet reported ending inventory totaling $5,097. Kyoto’s management believes that last year’s gross profit percentage is a good estimate of the gross profit in the current year. Kyoto’s sales last year were $48,540 and its cost of goods sold was $27,490. Before the tsunami Kyoto’s net sales were $28,903 and Kyoto purchased $18,005 of inventory. Of the inventory purchased, $45 had not yet been delivered to Kyoto. Round percentages to one decimal place Use the gross profit method to determine the following:
Required
- a. What is Kyoto’s historical gross profit percentage?
- b. What is Kyoto’s estimated cost of goods sold?
- c. What is Kyoto’s estimated gross profit?
- d. What is Kyoto’s estimated ending inventory?
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1.…
Adams Corporation estimates that it lost $187,200 in inventory from a recent flood. The following information is available from the records of the company's periodic inventory system: beginning inventory, $330,000; purchases and net sales from the beginning of the year through the date of the flood, $570,000 and $880,000, respectively. a. What is the company's gross profit ratio? b. What is the gross profit ratio?
Chapter 10 Solutions
Intermediate Accounting
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