Estimating with Gross Profit

in Chapter 5 (Video 8 of 9)

7 minutes

The Gross Profit Method is a way to estimate what our Cost of Goods Sold is, without having to do a physical inventory count.

This Video Mentioned Some Formulas

Profit Margin = Net Income / Sales Revenue

Sales

– COGS

Gross Profit

Gross Profit Margin = Gross Profit / Sales Revenue

Gross Profit Ratio is the same as Gross Profit Margin

Beginning Inventory

+ Net Purchases

– COGS

Ending Inventory

1	COGS and Inventory	2:57
2	Net Sales	10:03
3	Perpetual vs Periodic	7:10
4	FOB Shipping?	8:51
5	Transportation In	8:41
6	COGS	6:18
7	Drawbacks to Periodic	6:07
8	Estimating with Gross Profit You are here.	7:23
9	The Multistep Income Statement	12:44

	Click Here to View All Chapter 5 Problems at Once	View
1	Consignment Inventory	Easy
2	FOB Destination	Easy
3	Inventory Set Aside	Easy
4	Loss On Inventory	Easy
5	FOB Shipping	Moderate
6	FOB Shipping	Moderate
7	Calculating Operating Income	Hard
8	The Effect of Inventory Errors	Hard