Gross Profit Method The inventory was destroyed by fire on December 31. The following data were obtained from the accounting records: Jan. 1 Inventory $350,000 Jan. 1 - Dec. 31 Purchases (net) 2,950,000 Sales 4,440,000 Estimated gross profit rate 35% a. Estimate the cost of the inventory destroyed. Estimated Cost of Merchandise Destroyed $ $ $ $ b. Which method is used to estimate inventory cost in case of inventory destroyed by fire?
Gross Profit Method The inventory was destroyed by fire on December 31. The following data were obtained from the accounting records: Jan. 1 Inventory $350,000 Jan. 1 - Dec. 31 Purchases (net) 2,950,000 Sales 4,440,000 Estimated gross profit rate 35% a. Estimate the cost of the inventory destroyed. Estimated Cost of Merchandise Destroyed $ $ $ $ b. Which method is used to estimate inventory cost in case of inventory destroyed by fire?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Gross Profit Method
The inventory was destroyed by fire on December 31. The following data were obtained from the accounting records:
| Jan. 1 | Inventory | $350,000 |
| Jan. 1 - Dec. 31 | Purchases (net) | 2,950,000 |
| Sales | 4,440,000 | |
| Estimated gross profit rate | 35% |
a. Estimate the cost of the inventory destroyed.
| Estimated Cost of Merchandise Destroyed | ||
| $ | ||
| $ | ||
| $ | ||
| $ |
b. Which method is used to estimate inventory cost in case of inventory destroyed by fire?
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