A fire completely destroyed all the inventory of Glisan Lumber Yard on August 5, 20--. Fortunately, the accounting records were no destroyed in the fire. The following information is provided by Glisan Lumber Yard for the time period January 1 through August 5: Beginning inventory, January 1, 20-- $100,000 Net purchases, January 1 through August 5 420,000 Net sales, January 1 through August 5 732,000 Normal gross profit as a percentage of sales 40% Required: Estimate the amount of merchandise inventory destroyed in the fire on August 5 using the gross profit method.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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A fire completely destroyed all the inventory of Glisan Lumber Yard on August 5, 20--. Fortunately, the accounting records were not
destroyed in the fire. The following information is provided by Glisan Lumber Yard for the time period January 1 through August 5:
Beginning inventory, January 1, 20--
$100,000
Net purchases, January 1 through August 5 420,000
Net sales, January 1 through August 5
732,000
Normal gross profit as a percentage of sales
40%
Required:
Estimate the amount of merchandise inventory destroyed in the fire on August 5 using the gross profit method.
Transcribed Image Text:A fire completely destroyed all the inventory of Glisan Lumber Yard on August 5, 20--. Fortunately, the accounting records were not destroyed in the fire. The following information is provided by Glisan Lumber Yard for the time period January 1 through August 5: Beginning inventory, January 1, 20-- $100,000 Net purchases, January 1 through August 5 420,000 Net sales, January 1 through August 5 732,000 Normal gross profit as a percentage of sales 40% Required: Estimate the amount of merchandise inventory destroyed in the fire on August 5 using the gross profit method.
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