Quiz On Gross Profit Method (Theory and Problem)
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MEHEQuiz On Gross Profit Method (Theory and Problem)
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MEHE1.
Naomi Company:
Jan. 1 Inventory – 2,500,000
Net Purchases – 7,500,000
TGAS = 10,000,000
COGS = 9,000,000 (15,000,000 / 166 2/3%)
EI = 1,000,000
Less: Undamaged Inventory (150,000)
Inventory Fire Loss = 850,000
2. Benjie Company:
BI – 500,000
Purchases – 2,500,000
TGAS = 3,000,000
COGS = 2,400,000 [3,200,000 x (1 – 25%)]
EI = 600,000
Less: Physical Ending Inventory (500,000)
Estimated cost of missing inventory = 100,000
3. Bernice Company:
BI – 300,000
Purchases = 2,080,000 (workback)
TGAS = 2,380,000
COGS = 2,200,000 (2,750,000 x (1 - 20%)
Ending Inventory = 180,000
4. Charma Company:
Net sales = 1,800,000
Times: Gross Margin – 40%
Initial COGS = 1,080,000
Add: Ending inventory = 120,000
COGS = 1,200,000
5. Classy Company:
Inventory – Jan. 1 = 5,500,000
Purchases = 4,300,000
Purchase return – 200,000
Net Purchases = 4,100,000
TGAS = 9,600,000
COGS = 6,000,000 (7,500,000 / 1.25)
Estimated cost of inventory = 3,600,000
9. Mira Company:
BI – 400,000
Purchases – 4,800,000
TGAS = 5,200,000
COGS = 4,650,000 [6,200,000 x (1.0 – 25%)]
EI = 550,000
Less: Damaged inventory = 50,000
Inventory = 500,000
Times: 70% reimbursement loss
Explosion Loss: 150,000
10. Isabella Company:
BI – Jan. 1 = 6,600,000
Purchases – 3,000,000
Freight in – 300,000
Net Purchase = 3,300,000
TGAS = 9,900,000
COGS = 5,460,000 (7,800,000 x 30%)
EI = 4,440,000
11. Ramzel Company:
BI – Jan. 1 = 650,000
Purchases = 3,200,000
Purchase return = 75,000
Freight in = 50,000
Net Purchases = 3,175,000
TGAS = 3,825,000
COGS = 2,700,000 (4,500,000 x 40%)
Estimated cost of inventory (GROSS PROFIT METHOD) = 1,125,000
