Question

Ralston lost its entire inventory in a flood. Some accounting records were recovered, but the perpetual?

inventory records were destroyed. Over the past three years, the company's average gross profit percentage has been 38%. The following information for the current period was obtained from their accounting records:
Net sales: $200,000
Beginning inventory: 25,000
Net purchases 600,000

Determine the estimated cost of the inventory lost in the flood.

1 year ago - 1 answers

Best Answer

Chosen by Asker

Beginning inventory: 25,000
+
Net purchases 600,000
= Cost of Goods Available for Sale $625,000


Net sales: $200,000
-
Normal Gross Profit 76,000 (200,000 x 38%)
= Estimated Cost of Goods Sold $124,000

625,000 - 124,000 = $501,000 ending inventory lost in flood

Source(s):

1 year ago