6.7 Use the gross profit method to estimate ending inventory
1) If a company experiences a loss of inventory for fire, there is no way to estimate the inventory.
2) The first step in using the gross profit method to estimate ending inventory is to:
A) calculate the cost of goods available for sale.
B) estimate the ending inventory.
C) estimate the beginning inventory.
D) estimate the cost of goods sold.
E) calculate net income.
3) The second step in using the gross profit method to estimate ending inventory is to:
A) estimate the cost of goods sold.
B) calculate the cost of goods available for sale.
C) estimate the ending inventory.
D) estimate the beginning inventory.
E) estimate net income.
4) The last step in using the gross profit method to estimate ending inventory is to:
A) estimate the beginning inventory.
B) estimate the cost of goods sold.
C) calculate the cost of goods available for sale.
D) estimate the ending inventory.
E) calculate net income.
5) Beginning inventory + Net purchases = ________.
A) Cost of goods sold
B) Cost of goods available for sale
C) Gross profit
D) Ending inventory
E) Sales revenue
6) Net sales times the historical gross profit percentage yields the estimated:
A) ending inventory.
B) beginning inventory.
C) gross profit.
D) cost of goods sold.
E) net income.
7) Net sales minus estimated gross profit yields the estimated __________.
8) Cost of goods available for sale minus estimated cost of goods sold yields the estimated __________.
9) A company has $4,500 in net sales, $3,200 in gross profit, $1,300 in ending inventory, and $1,800 in beginning inventory. What is the company's cost of goods sold?
10) A company has $8,200 in net sales, $1,100 in gross profit, $2,500 in ending inventory, and $2,000 in beginning inventory. What is the company's cost of goods sold?