**Estimating Inventory Loss Using the Gross Profit Method**Blue Spruce Corporation’s March 31 inventory was destroyed by fire. Initially, the inventory from January 1 was valued at $171,000. Purchases made from January through March reached a total of $592,800. During this same period, sales revenue amounted to $684,000. Typically, Blue Spruce maintains a gross profit margin of 25% on sales.**Objective:**Calculate the estimated value of the March 31 inventory destroyed by using the gross profit method.**Calculation:**- **Estimated ending inventory destroyed in fire:** $ \text{Estimated inventory value} = \text{(to be calculated)} $

We assume that all the inventory of 31 March was destryed by the fire.

Blue Spruce Corporation's March 31 inventory was destroyed by fire. January 1 inventory was $171,000, and purchases for January through March totaled $592,800. Sales revenue for the same period was $684,000. Blue Spruce's normal gross profit percentage is 25% on sales. Using the gross profit method, estimate Blue Spruce's March 31 inventory that was destroyed by fire. Estimated ending inventory destroyed in fıre 2$

Blue Spruce Corporation's March 31 inventory was destroyed by fire. January 1 inventory was $171,000, and purchases for January through March totaled $592,800. Sales revenue for the same period was $684,000. Blue Spruce's normal gross profit percentage is 25% on sales. Using the gross profit method, estimate Blue Spruce's March 31 inventory that was destroyed by fire. Estimated ending inventory destroyed in fıre 2$

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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