A fire destroyed a warehouse of the Goren Group, Inc., on May 4, 2021. Accounting records on that date indicated the following: Merchandise inventory, January 1, 2021 $1,900,000Purchases to date 5,800,000Freight-in 400,000Sales to date 8,200,000 The gross profit ratio has averaged 20% of sales for the past four years.Required:Use the gross profit method to estimate the cost of the inventory destroyed in the fire.
A fire destroyed a warehouse of the Goren Group, Inc., on May 4, 2021. Accounting records on that date indicated the following:
Merchandise inventory, January 1, 2021 $1,900,000
Purchases to date 5,800,000
Freight-in 400,000
Sales to date 8,200,000
The gross profit ratio has averaged 20% of sales for the past four years.
Required:
Use the gross profit method to estimate the cost of the inventory destroyed in the fire.
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