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Late on the night of September 30, 2011, an arsonist destroyed the Pumpkin Company warehouse, which was full of inventory. Luckily the accounting records were stored in another facility and not destroyed in the fire. Pumpkin Company is in the process of filing a claim with its insurance company for the inventory loss due to the fire. Beginning inventory Purchases through September 30, 2011 $2,25,500 $ 6,23,250 Net sales revenue through Sept. 30, 2011 $ 8,25,500 The gross margin percent has historically been 30% of net sales revenue. Required: Estimate the value of the inventory destroyed in the fire using the gross margin method.

Late on the night of September 30, 2011, an arsonist destroyed the Pumpkin Company warehouse, which was full of inventory. Luckily the accounting records were stored in another facility and not destroyed in the fire. Pumpkin Company is in the process of filing a claim with its insurance company for the inventory loss due to the fire. Beginning inventory Purchases through September 30, 2011 $2,25,500 $ 6,23,250 Net sales revenue through Sept. 30, 2011 $ 8,25,500 The gross margin percent has historically been 30% of net sales revenue. Required: Estimate the value of the inventory destroyed in the fire using the gross margin method.

Century 21 Accounting Multicolumn Journal
Century 21 Accounting Multicolumn Journal
11th Edition
ISBN:9781337679503
Author:Gilbertson
Publisher:Gilbertson
Chapter20: Accounting For Inventory
Section: Chapter Questions
Problem 1CP
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Late on the night of September 30, 2011, an arsonist destroyed the Pumpkin Company warehouse, which was full of inventory. Luckily the accounting records were stored in another facility and not destroyed in the fire. Pumpkin Company is in the process of filing a claim with its insurance company for the inventory loss due to the fire. Beginning inventory Purchases through September 30, 2011 $2,25,500 $ 6,23,250 Net sales revenue through Sept. 30, 2011 $ 8,25,500 The gross margin percent has historically been 30% of net sales revenue. Required: Estimate the value of the inventory destroyed in the fire using the gross margin method.
Transcribed Image Text:Late on the night of September 30, 2011, an arsonist destroyed the Pumpkin Company warehouse, which was full of inventory. Luckily the accounting records were stored in another facility and not destroyed in the fire. Pumpkin Company is in the process of filing a claim with its insurance company for the inventory loss due to the fire. Beginning inventory Purchases through September 30, 2011 $2,25,500 $ 6,23,250 Net sales revenue through Sept. 30, 2011 $ 8,25,500 The gross margin percent has historically been 30% of net sales revenue. Required: Estimate the value of the inventory destroyed in the fire using the gross margin method.
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