Question

Coastal Shores Inc. (CSI) was destroyed by Hurricane Fred on August 5, 2021. At January 1, CSI reported an inventory of $184,000. Sales from January 1, 2021, to August 5, 2021, totaled $494,000 and purchases totaled $209,000 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:

$84,250

Explanation:

The computation of the estimated inventory loss is shown below:

= Opening Inventory + Purchases - Cost of Sales

where,

Cost of sales is

=  $494,000 ×100 ÷ 160  

= $308,750

And, the opening inventory is $184,000

And, the purchase is $209,000

So, the estimated inventory loss is

= $184,000 + $209,000 - $308,750

= $84,250

We simply applied the above formula so that the estimated inventory loss could arrive