A company's store was destroyed by an earthquake on February 10. Only the following information for the current period could be recovered. Beginning inventory, January 1: January 1 through February 10 purchases (net) January 1 through February 10 sales (net) The company's estimated gross profit rate is 40%. Estimate the cost of the destroyed inventory using the gross profit method. Beginning inventory Estimated February 10 inventory destroyed $100,000 $310,000 $620,000 $ 100,000

A company's store was destroyed by an earthquake on February 10. Only the following information for the current period could be recovered. Beginning inventory, January 1: January 1 through February 10 purchases (net) January 1 through February 10 sales (net) The company's estimated gross profit rate is 40%. Estimate the cost of the destroyed inventory using the gross profit method. Beginning inventory Estimated February 10 inventory destroyed $100,000 $310,000 $620,000 $ 100,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter8: Inventories: Special Valuation Issues

Section: Chapter Questions

Problem 10E: Gross Profit Method: Estimation of Theft Loss You are requested by a client on September 28 to...

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Gross Profit Method: Estimation of Theft Loss You are requested by a client on September 28 to prepare an insurance claim for a theft loss that occurred on that day. You immediately take an inventory and obtain the following data: The inventory on September 28 indicates that an inventory of 15,000 remains after the theft. During the past year, net sales were made at 50% above the cost of goods sold. Required: 1. Compute the inventory lost during the theft. Round the gross profit percentage to 3 decimal places. 2. Next Level What concerns might you have about the inventory estimation under the gross profit method?
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Sheffield Inc.’s April 30 inventory was destroyed by the explosion of an underground oil tank. January 1 inventory was $322,000 and purchases for January through April totalled $800,000. Sales for the same period were $1.5 million. Sheffield 's normal gross profit percentage is 30%.Using the gross profit method, estimate the amount of Sheffield 's April 30 inventory that was destroyed. Estimated ending inventory destroyed in explosion $enter a dollar amount of the ending inventory Save for Later Last saved 1 day ago. Saved work will be auto-submitted on the due date. Attempts: 0 of 1 used Submit Answer