Question: Gross profit On January 1, ABC Co. Department Store had an inventory of $60,000. January purchases were $70,000 and January sales were $100,000. On February 1 a fire destroyed most of the inventory. The rate of gross profit was 20% of sales. Merchandise with a cost of $6,000 remained undamaged after the fire. Assume the store had no insurance coverage. Required: a. Using the gross profit method, compute the estimated ending inventory. b. Compute the estimated fire loss.

Question: Gross profit On January 1, ABC Co. Department Store had an inventory of $60,000. January purchases were $70,000 and January sales were $100,000. On February 1 a fire destroyed most of the inventory. The rate of gross profit was 20% of sales. Merchandise with a cost of $6,000 remained undamaged after the fire. Assume the store had no insurance coverage. Required: a. Using the gross profit method, compute the estimated ending inventory. b. Compute the estimated fire loss.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter8: Inventories: Special Valuation Issues

Section: Chapter Questions

Problem 10E: Gross Profit Method: Estimation of Theft Loss You are requested by a client on September 28 to...

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Current Attempt in Progress The following information is available for October for Wildhorse Company. (Round answers to 0 decimal places, e.g. 5,275.) Beginning inventory $490000 1380000 Net purchases Net sales 2760000 Percentage markup on cost 66.67% A fire destroyed Wildhorse's October 31 inventory, leaving undamaged inventory with a cost of $28500. Using the gross profit method, the estimated ending inventory destroyed by fire is O $185500. O $707500. O $890000. O $736000.