Question

A company's warehouse contents were destroyed by a flood on September 12. The following information was the only information that was salvaged: Inventory, beginning: $29,400 Purchases for the period: $18,400 Sales for the period: $56,400 Sales returns for the period: $840 The company's average gross profit ratio is 26%. What is the estimated cost of the lost inventory

Answer 1

Answer:

$6,685

Explanation:

Calculation for the estimated cost of the lost inventory

First step is to calculate the Cost of goods sold

Cost Of Goods Sold = ( $56,400- $840) * (100%-26%)

Cost Of Goods Sold=$55,560*74%

Cost Of Goods Sold=$41,115

Second step is to calculate Goods available for sale

Goods available for sale = $29,400 + $18,400

Goods available for sale = $47,800

Last step is to calculate estimated cost of the lost inventory

Using this formula

Esrimated Inventory=Goods available for sale- Cost Of Goods Sold

Let plug in the formula

Estimated Inventory= $47,800 - $41,115

Estimated Inventory= $6,685

Therefore the estimated cost of the lost inventory will be $6,685