Jackson Company Has Sales of $300,000 and Cost of Goods

Multiple Choice

Jackson Company has sales of $300,000 and cost of goods available for sale of $270,000. If the gross profit ratio is typically 30%, the estimated cost of the ending inventory under the gross profit method would be:

A) $60,000
B) $180,000
C) $30,000
D) $90,000
E) Impossible to determine from the information provideD.If sales for the period were $300,000 and the company's typical gross profit ratio is 30%, gross profit would be approximately $90,000. That means that cost of goods sold must have been $210,000. Subtracting cost of goods sold of $210,000 from the $270,000 of cost of goods available for sale yields ending inventory of $60,000.