On February 26, a hurricane destroyed the entire inventory stored in a warehouse owned by the Rockport Corporation. The following information is available from the records of the company's periodic inventory system: beginning inventory, $315,000; purchases and net sales from the beginning of the year through February 26, $590,000 and $790,000, respectively; gross profit ratio, 35%. Estimate the cost of the inventory destroyed by the hurricane using the gross profit method. Beginning inventory Plus: Net purchases Cost of goods available for sale Less: Cost of goods sold: Net sales Less: Estimated gross profit Estimated cost of goods sold Estimated cost of inventory destroyed

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On February 26, a hurricane destroyed the entire inventory stored in a warehouse owned by the Rockport Corporation. The following
information is available from the records of the company's periodic inventory system: beginning inventory, $315,000; purchases and
net sales from the beginning of the year through February 26, $590,000 and $790,000, respectively; gross profit ratio, 35%.
Estimate the cost of the inventory destroyed by the hurricane using the gross profit method.
Beginning inventory
Plus: Net purchases
Cost of goods available for sale
Less: Cost of goods sold:
Net sales
Less: Estimated gross profit
Estimated cost of goods sold
Estimated cost of inventory destroyed
4
Transcribed Image Text:On February 26, a hurricane destroyed the entire inventory stored in a warehouse owned by the Rockport Corporation. The following information is available from the records of the company's periodic inventory system: beginning inventory, $315,000; purchases and net sales from the beginning of the year through February 26, $590,000 and $790,000, respectively; gross profit ratio, 35%. Estimate the cost of the inventory destroyed by the hurricane using the gross profit method. Beginning inventory Plus: Net purchases Cost of goods available for sale Less: Cost of goods sold: Net sales Less: Estimated gross profit Estimated cost of goods sold Estimated cost of inventory destroyed 4
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