The following information for the first quarter is available from its records. 1 answer below »

Ernst Equipment Co. wants to prepare interim financial statements for the first quarter. The company wishes to avoid making a physical count of inventory. Ernst’s gross profit rate averages 30%. The following information for the first quarter is available from its records.

January 1 beginning inventory

$ 752,880

Cost of goods purchased

2,159,630

Sales

3,710,250

Sales returns

74,200

Required

Use the gross profit method to estimate the company’s first quarter ending inventory.

 

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