Big Sky Ltd Computations

Essay

Big Sky Ltd.attempts to price merchandise so as to yield a gross margin of 25 percent based on selling price.If the inventory on August 1 was $30,000 and sales and purchases during August and September were as given below,compute a reliable estimate of the inventory at the end of each month. $$\begin{array} { l l l l l } \text { Month } & \text { Sales } & \text { Purchases } & \text { Ending Inventory } \\\hline \text { August } & \$ 160,000 & \$ 126,000 & \$ \\\text { September } & 180,000 & 128,000 & \$\end{array}$$ Computations: