Question

A fire destroys all of the merchandise of Coronado Company on February 10, 2017. Presented below is information compiled up to the date of the fire:
Inventory, January 1, 2017 $423,300
Sales revenue to February 10, 2017 1,924,500
Purchases to February 10, 2017 1,140,950
Freight-in to February 10, 2017 56,790
Rate of gross profit on selling price 40%

What is the approximate inventory on February 10, 2017

Answer 1

Answer:

Value of inventory =$466,040

Explanation:

The value of goods in inventory

=Value of opening inventory + cost of purchases - cost of gold sold

Note that there is a gross profit on selling price, therefore the cost of the goods sold would be

Cost of goods sold = sales value - (40% × sales value)

                               = 1,924,500 - (40% × 1,924,500)

                                =  1,154,700.00

Value of inventory =  423,300 +  (1,140,950 + 56,790) -1,154,700.00

                                =$466,040

Note that the freight-in was added as part of the cost of purchases on February 10