Henderson Company uses the gross profit method to estimate e

Henderson Company uses the gross profit method to estimate ending inventory and cost of goods sold when preparing monthly financial statements required by its bank. Inventory on hand at the end of July was $122,500. The following information for the month of August was available from company records:

Solution

Particulars

Amout

Amout

Particulars

Amout

Amout

Sales

350,000

Opening Inventory

122,500

less: Sales returns

-9,000

                       341,000

Purchases

219,000

Less:Purchases returns

4300

214,700

Freight-in

5,200

Closing Stock

            103,700

Gross Profit =Sales x 30%

102300

Less: Stock Stolen

               10,000

                         93,700

341000 x 30%

102300

                                       444,700

                       444,700

Closing Stock=$93,700

Note: Got the incomplete question from google books.