On September 22, 2021, a flood destroyed the entire merchandise inventory on hand in a warehouse owned by the Rocklin Sporting Goods Company. The following information is available from the records of the company’s periodic inventory system: Inventory, January 1, 2021 $140,000Net purchases, January 1 through September 22 370,000Net sales, January 1 through September 22 550,000Gross profit ratio 25% Required:Estimate the cost of inventory destroyed in the flood using the gross profit method.
On September 22, 2021, a flood destroyed the entire merchandise inventory on hand in a warehouse owned by the Rocklin Sporting Goods Company. The following information is available from the records of the company’s periodic inventory system: Inventory, January 1, 2021 $140,000Net purchases, January 1 through September 22 370,000Net sales, January 1 through September 22 550,000Gross profit ratio 25% Required:Estimate the cost of inventory destroyed in the flood using the gross profit method.
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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On September 22, 2021, a flood destroyed the entire merchandise inventory on hand in a warehouse owned by the Rocklin Sporting Goods Company. The following information is available from the records of the company’s periodic inventory system:
Inventory, January 1, 2021 $140,000
Net purchases, January 1 through September 22 370,000
Net sales, January 1 through September 22 550,000
Gross profit ratio 25%
Required:
Estimate the cost of inventory destroyed in the flood using the gross profit method.
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