Answer:
The estimated cost of missing inventory is $300,000
Explanation:
In order to calculate the estimated cost of missing inventory first we need to calculate the cost of goods sold and the closing inventory as follows:
The cost of goods sold = $11,840,000*0.75 = $8,880,000
Closing Inventory = opening inventory + Purchases - Cost of goods sold
= $1,840,000 + $9,400,000 - $8,880,000 = $2,440,000
According to the given data physical inventory taken on December 31, 2020 resulted in an ending inventory of $2,140,000
Therefore, cost of Missing Inventory =$2,440,000-$2,140,000= $300,000
