The accountants for Ruiz Imports need to estimate the ending inventory balance so that they can prepare quarterly financial statements. The accountants have gathered the following information:

Beginning inventory $96,950
Sales $138,500
Purchases $13,850
Gross profit ratio 40%

Use the gross profit method to estimate the ending inventory

Beginning + Purchase = COGS + Ending. Now you have sales and gross profit ratio, then you can get the COGS. Then use the formula for ending inventory.