Question

Grouper Corporation’s April 30 inventory was destroyed by fire. January 1 inventory was $160,600, and purchases for January through April totaled $474,000. Sales revenue for the same period were $669,900. Grouper’s normal gross profit percentage is 30% on sales. Using the gross profit method, estimate Grouper’s April 30 inventory that was destroyed by fire.
Estimated ending inventory destroyed in fire. $ _____________

Answer 1

Answer:

$165,670

Explanation:

Cost of goods sold = Sales revenue (1 - Gross profit)

                                = $669,900 × (1 - 0.30)

                                = $669,900 × 0.70

                                = $468,930

Estimated ending inventory destroyed in fire:

= Beginning inventory + Purchase - cost of goods sold

= $160,600 + $474,000 - $468,930

= $165,670