Question: A fire destroyed a warehouse of the Goren Group, Inc., on May 4, 2016. Accounting records on that date indicated the following: Merchandise inventory, January 1, 2016 $2,090,000 Purchases to date Freight-in Sales to date 5,990,000 590,000 10,100,000 The gross profit ratio has averaged 30% of sales for the past four years. Required: Use the gross profit method to estimate the cost of the inventory destroyed in the fire.
Question: A fire destroyed a warehouse of the Goren Group, Inc., on May 4, 2016. Accounting records on that date indicated the following: Merchandise inventory, January 1, 2016 $2,090,000 Purchases to date Freight-in Sales to date 5,990,000 590,000 10,100,000 The gross profit ratio has averaged 30% of sales for the past four years. Required: Use the gross profit method to estimate the cost of the inventory destroyed in the fire.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Question:
A fire destroyed a warehouse of the Goren Group, Inc., on May 4,
2016. Accounting records on that date indicated the following:
Merchandise inventory, January 1, 2016 $2,090,000
Purchases to date
Freight-in
Sales to date
5,990,000
590,000
10,100,000
The gross profit ratio has averaged 30% 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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