When using the gross margin method to estimate inventory,which of the following is a step in the computation?
A)Add the amount goods available for sale to estimated cost of goods sold
B)Add estimated gross margin to sales
C)Subtract estimated goods available for sale from beginning inventory
D)Subtract estimated cost of goods sold from the amount of goods available for sale

Question

Quizplus · Accepted Answer

When applying the gross margin method,the estimated cost of the ending inventory is computed as follows: (1)Calculate the expected gross margin ratio using financial statement data from prior periods.(2)Multiply the expected gross margin ratio by the current period's sales.(3)Subtract the estimated gross margin from sales to estimate the amount of cost of goods sold.(4)Subtract the estimated cost of goods sold from the amount of goods available for sale to estimate the amount of ending inventory.

When Using the Gross Margin Method to Estimate Inventory,which of the Following