Answer:
$ 16,875
Explanation:
Beginning Inventory $ 20,000
Purchases $ 250,000
Sales $ 300,000
Gross Profit: 35%
<u>Inventory before flood determination</u>:
<em />
<em>Cost of Sales ( 100% - 35% ) x Sales </em>
<em> = ( 1 - 0.35 ) x 300.000
---> Cost of Sales </em>
<em> = 195,000 </em>
Sales 300,000.00 100%
Cost <u>195,000.00</u> 65%
Gross Profit: 105,000.00 35%
Beginning Inventory $ 20,000
Purchases $ 250,000
Sales -$ 195,000
Inventory before flood: $ 75,000
Inventory before flood: $ 75,000
Inventory damaged sold: $ -7,500
Net Loss: $ 67,500
<u>Insurance Reimbursement</u>: $ 50,625.00 ( 67,500 x 75% )
<u>Net Loss from flood</u>: $ 16,875 ( 67,500 - 50,625 )