Answer:
The answer is $119,000
Explanation:
cost of merchandise sold = Sales - Gross profit.
To find gross profit:
Gross profit rate x sales
0.42 x $1,450,000
= $609,000.
Now to calculate Cost of Sales:
Cost of Sales = Sales - gross profit
$1,450,000 - $609,000
$841,000
Now to calculate Estimated ending merchandise inventory:
Beginning merchandise inventory + purchases - cost of sales
=$100,000 + $860,000 - $841,000
=$119,000
