Based on the following data, estimate the cost of the ending merchandise inventory:

Sales $9,250,000
Estimated gross profit rate 36%
Beginning merchandise inventory $ 180,000
Purchases (net) 5,945,000
Merchandise available for sale $6,125,000

$205,000

Explanation:

Given that,

Sales = $9,250,000

Estimated gross profit rate = 36%

Beginning merchandise inventory = $180,000

Purchases (net) = $5,945,000

Merchandise available for sale = $6,125,000

Estimated cost of merchandise sold:

= Sales(net) - Gross profit

= $9,250,000 - (36% × $9,250,000)

= $9,250,000 - $3,330,000

= $5,920,000

Cost of Ending Merchandise Inventory:

= Merchandise available for sale - Estimated cost of merchandise sold

= $6,125,000 - $5,920,000

= $205,000

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