Suppose Base Company began May with inventory of $2,000 and purchased $8,000 worth of inventory during the first half of May. Sales for the first half of May amounted to $12,000. Then, a fire destroyed the remaining inventory. Base Company has had a gross profit ratio of approximately 30% for the first four months of the year. Approximately how much inventory did Base Company lose in the fire?

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Answer 1

Textbook Question

Chapter 5B, Problem 1YT

Suppose Base Company began May with inventory of $2,000 and purchased $8,000 worth of inventory during the first half of May. Sales for the first half of May amounted to $12,000. Then, a fire destroyed the remaining inventory. Base Company has had a gross profit ratio of approximately 30% for the first four months of the year. Approximately how much inventory did Base Company lose in the fire?

Expert Solution & Answer

To determine

Compute the amount of inventory that Company B loses in the fire accident.

Explanation of Solution

Given information:

Inventory at Beginning of Month May is $2,000, Inventory purchased during the first half of the month is $8,000, and sales during the first half of the month are $12,000.

Gross profit percentage is 30% and the remaining inventories are destroyed in the fire which means the ending inventory destroyed in fire.

Ending inventory = Beginning inventory + Purchases – Cost of goods sold= $2,000 + $8,000 – [$12,000 × (1 − 30%)]= $10,000 – [$12,000 × 70%]= $1,600

Therefore, the inventory destroyed in fire is $1,600.

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Answer 2

Textbook Question

Chapter 5B, Problem 1YT

Suppose Base Company began May with inventory of $2,000 and purchased $8,000 worth of inventory during the first half of May. Sales for the first half of May amounted to $12,000. Then, a fire destroyed the remaining inventory. Base Company has had a gross profit ratio of approximately 30% for the first four months of the year. Approximately how much inventory did Base Company lose in the fire?

Expert Solution & Answer

To determine

Compute the amount of inventory that Company B loses in the fire accident.

Explanation of Solution

Given information:

Inventory at Beginning of Month May is $2,000, Inventory purchased during the first half of the month is $8,000, and sales during the first half of the month are $12,000.

Gross profit percentage is 30% and the remaining inventories are destroyed in the fire which means the ending inventory destroyed in fire.

Ending inventory = Beginning inventory + Purchases – Cost of goods sold= $2,000 + $8,000 – [$12,000 × (1 − 30%)]= $10,000 – [$12,000 × 70%]= $1,600

Therefore, the inventory destroyed in fire is $1,600.

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Answer 3

Textbook Question

Chapter 5B, Problem 1YT

Suppose Base Company began May with inventory of $2,000 and purchased $8,000 worth of inventory during the first half of May. Sales for the first half of May amounted to $12,000. Then, a fire destroyed the remaining inventory. Base Company has had a gross profit ratio of approximately 30% for the first four months of the year. Approximately how much inventory did Base Company lose in the fire?

Expert Solution & Answer

To determine

Compute the amount of inventory that Company B loses in the fire accident.

Explanation of Solution

Given information:

Inventory at Beginning of Month May is $2,000, Inventory purchased during the first half of the month is $8,000, and sales during the first half of the month are $12,000.

Gross profit percentage is 30% and the remaining inventories are destroyed in the fire which means the ending inventory destroyed in fire.

Ending inventory = Beginning inventory + Purchases – Cost of goods sold= $2,000 + $8,000 – [$12,000 × (1 − 30%)]= $10,000 – [$12,000 × 70%]= $1,600

Therefore, the inventory destroyed in fire is $1,600.

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Answer 4

Textbook Question

Chapter 5B, Problem 1YT

Suppose Base Company began May with inventory of $2,000 and purchased $8,000 worth of inventory during the first half of May. Sales for the first half of May amounted to $12,000. Then, a fire destroyed the remaining inventory. Base Company has had a gross profit ratio of approximately 30% for the first four months of the year. Approximately how much inventory did Base Company lose in the fire?

Expert Solution & Answer

To determine

Compute the amount of inventory that Company B loses in the fire accident.

Explanation of Solution

Given information:

Inventory at Beginning of Month May is $2,000, Inventory purchased during the first half of the month is $8,000, and sales during the first half of the month are $12,000.

Gross profit percentage is 30% and the remaining inventories are destroyed in the fire which means the ending inventory destroyed in fire.

Ending inventory = Beginning inventory + Purchases – Cost of goods sold= $2,000 + $8,000 – [$12,000 × (1 − 30%)]= $10,000 – [$12,000 × 70%]= $1,600

Therefore, the inventory destroyed in fire is $1,600.

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Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

To determine

Compute the amount of inventory that Company B loses in the fire accident.

Explanation of Solution

Given information:

Inventory at Beginning of Month May is $2,000, Inventory purchased during the first half of the month is $8,000, and sales during the first half of the month are $12,000.

Gross profit percentage is 30% and the remaining inventories are destroyed in the fire which means the ending inventory destroyed in fire.

Ending inventory = Beginning inventory + Purchases – Cost of goods sold= $2,000 + $8,000 – [$12,000 × (1 − 30%)]= $10,000 – [$12,000 × 70%]= $1,600

Therefore, the inventory destroyed in fire is $1,600.

Answer 8

Expert Solution & Answer

To determine

Compute the amount of inventory that Company B loses in the fire accident.

Explanation of Solution

Given information:

Inventory at Beginning of Month May is $2,000, Inventory purchased during the first half of the month is $8,000, and sales during the first half of the month are $12,000.

Gross profit percentage is 30% and the remaining inventories are destroyed in the fire which means the ending inventory destroyed in fire.

Ending inventory = Beginning inventory + Purchases – Cost of goods sold= $2,000 + $8,000 – [$12,000 × (1 − 30%)]= $10,000 – [$12,000 × 70%]= $1,600

Therefore, the inventory destroyed in fire is $1,600.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

To determine

Compute the amount of inventory that Company B loses in the fire accident.

Answer 12

Explanation of Solution

Given information:

Inventory at Beginning of Month May is $2,000, Inventory purchased during the first half of the month is $8,000, and sales during the first half of the month are $12,000.

Gross profit percentage is 30% and the remaining inventories are destroyed in the fire which means the ending inventory destroyed in fire.

Ending inventory = Beginning inventory + Purchases – Cost of goods sold= $2,000 + $8,000 – [$12,000 × (1 − 30%)]= $10,000 – [$12,000 × 70%]= $1,600

Therefore, the inventory destroyed in fire is $1,600.

Answer 13

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