The Sahara Company's inventory was partially destroyed on June 4, 2016, when its warehouse caught on fire early in the morning. Inventory that had a cost of $8,000 was saved. The accounting records, which were located in a fireproof vault, contained the following information: Sales (1/1/16 through 6/3/16) $260,000 Purchases (1/1/16 through 6/3/16) 190,000 Inventory (1/1/16) 40,000 Gross profit ratio 30% of cost Using the gross profit method, what is the estimated cost of the inventory destroyed by the fire?
The Sahara Company's inventory was partially destroyed on June 4, 2016, when its warehouse caught on fire early in the morning. Inventory that had a cost of $8,000 was saved. The accounting records, which were located in a fireproof vault, contained the following information: Sales (1/1/16 through 6/3/16) $260,000 Purchases (1/1/16 through 6/3/16) 190,000 Inventory (1/1/16) 40,000 Gross profit ratio 30% of cost Using the gross profit method, what is the estimated cost of the inventory destroyed by the fire?
Century 21 Accounting Multicolumn Journal
11th Edition
ISBN:9781337679503
Author:Gilbertson
Publisher:Gilbertson
Chapter20: Accounting For Inventory
Section: Chapter Questions
Problem 1CP
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The Sahara Company's inventory was partially destroyed on June 4, 2016, when its warehouse caught on fire early in the morning. Inventory that had a cost of $8,000 was saved. The accounting records, which were located in a fireproof vault, contained the following information:
Sales (1/1/16 through 6/3/16) | $260,000 |
Purchases (1/1/16 through 6/3/16) | 190,000 |
Inventory (1/1/16) | 40,000 |
Gross profit ratio | 30% of cost |
Using the gross profit method, what is the estimated cost of the inventory destroyed by the fire?
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