Question

Blue Corporation’s April 30 inventory was destroyed by fire. January 1 inventory was $155,000, and purchases for January through April totaled $467,300. Sales revenue for the same period was $684,500. Blue’s normal gross profit percentage is 25% on sales. Using the gross profit method, estimate Blue’s April 30 inventory that was destroyed by fire. Estimated ending inventory destroyed in fire __ $.

Answer 1

Answer:

Ending inventory will be $108925

Explanation:

We have to find the estimated ending inventory

It is given by

Estimated ending inventory = Cost of Goods available for sale - Cost of Goods Sold

Cost of Goods available for sale = $155,000+$467,300 = $622,300

Cost of Goods Sold = Sales - Gross profit = $654500-\frac{654500\times 25}{100}= 513375$

So ending inventory = $622300 - $513375 = $108925

So ending inventory will be $108925