What is the Estimated Cost of Goods Sold? What is the Estimated Ending Inventory?

Question

January 1... $190,000

January 1 through September 5 purchases (net)... $352,000

January 1 through September 5 sales (net)...$685,000

Year 2015 estimated gross profit rate...44%

Answer 1

I’m assuming the January 1 Beginning Inventory is the $190,000 you listed.

Solving for COGS:

Gross Profit % = (Net Sales – COGS) ÷ Net Sales

44% = (685,000 – COGS) ÷ 685,000

44% X 685,000 = 685,000 – COGS

COGS = 685,000 - (44% X 685,000)

COGS = 383,600

Solving for Ending Inventory:

   190,000 Beginning Inventory

+ 352,000 Purchases

   542,000 Goods available for sale

- 383,600 COGS

158,400 Ending Inventory

Hope this helps!

Scott