Over the past several years, landmark supplies has average a gross profit of 34%, at the end of 20–, the income statement of the company included the information shown below:
cost of goods sold:
Merchandise inventory, January 1,20– $67,000
Goods available for sale $907,000
Less merchandise inventory, December 31,20– 130,000
Cost of goods sold 777.000
Gross profit on sale 323,000
Investigation revealed that employees of the company had not taken an actualphysical count of the inventory on December 31,20–. Instead,they had merely estimated the inventory.
Under the fross profit method of inventory estimation, determine the following items to check the accuracy of the employees’ estimates.
Gross profit on sales=?
Cost of goods sold=?