Question

he inventory of Marigold Corp. was destroyed by fire on March 1. From an examination of the accounting records, the following data for the first 2 months of the year are obtained: Sales Revenue $55,000, Sales Returns and Allowances $1,100, Purchases $33,500, Freight-In $1,500, and Purchase Returns and Allowances $1,600. Determine the merchandise lost by fire, assuming: A beginning inventory of $21,500 and a gross profit rate of 40% on net sales.

Answer 1

Answer:

$22,560

Explanation:

The computation of the inventory lost is shown below:

To beginning inventory $21,500 By net sales($55,000 - $1,100)  $53.900

To net purchases

($33,500 - $1,600)         $31,900 By merchandise lost(balance)   $22,560

To freight                        $1,500  

To gross profit

($53,900 × 40%)            $21,560  

Total                               $76,420  Total                                           $76,420