On March 31 a company needed to estimate its ending inventory to prepare its first quarter financial statements.The following information is available: Beginning inventory,January 1: $4,000
Net sales: $80,000
Net purchases: $78,000
The company's gross margin ratio is 25%.Using the gross profit method,the cost of goods sold would be:
A)$60,000.
B)$20,000.
C)$58,500.
D)$63,000.
E)$19,500.

Question

Quizplus · Accepted Answer

The gross margin ratio is 25%, meaning the cost of goods sold is 75% of net sales. Therefore, the cost of goods sold is 75% of $80,000, which is $60,000.

On March 31 a Company Needed to Estimate Its Ending