Question - Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May. Inventory, May 1 $160,000 Purchases (gross) $640,000 Freight-in $30,000 Sales $1,000,000 Sales returns $70,000 Purchase discounts $12,000.
Compute the estimated inventory at May 31, assuming that the gross profit is 25% of sales.
Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost.