Chapter 6, Problem 6.5EYCT

(a) (1)

To determine

Periodic Inventory System:

Periodic inventory system is a system, in which the inventory is updated in the accounting records on a periodic basis such as at the end of each month, quarter or year. In other words, it is an accounting method which is used to determine the amount of inventory at the end of each accounting period.

Gross Profit Percentage:

Gross profit percentage is the financial ratio that shows the relationship between the gross profit and net sales. It represents gross profit as a percentage of net sales. Gross Profit is the difference between the net sales revenue, and the cost of goods sold. It can be calculated by using the following formula:

$\boxed{\text{Gross profit percentage= }\frac{\text{Gross profit}}{\text{Net sales}}\times 100}$

The balances in the sales revenue of Company C, at April 10, 2019.

(2)

To determine

The balances in the purchases of Company C, at April 10, 2019.

(b)

To determine

The average gross profit rate for the years 2017, and 2018.

(c)

To determine

The inventory loss as a result of the fire, using the gross profit method.