Question

Coastal Shores Inc. (CSI) was completely destroyed by Hurricane Fred on August 5, 2021. At January 1, CSI reported an inventory of $153,000. Sales from January 1, 2021, to August 5, 2021, totaled $432,000 and purchases totaled $175,500 during that time. CSI consistently marks up its products 60% over cost to arrive at a selling price. The estimated inventory loss due to Hurricane Fred would be:

Answer 1

Answer:

58,500

Explanation:

Given the information above, the formula for Inventory loss is

Inventory loss = Opening inventory + Purchases - Cost of sales

Where,

Cost of sales = $432,000 × 100 ÷ 160

=$270,000

Since opening inventory = $153,000

Purchases = $175,500

Therefore,

Inventory loss = $153,000 + $175,500 - $270,000

= $58,500