Gross profit method The inventory was destroyed by fire on December 31. The following data were obtained from the accounting records: Jan. 1 Jan. 1 Dec. 31 Inventory Purchases (net) Sales Estimated gross profit rate a. Estimate the cost of the inventory destroyed. Estimated Cost of Merchandise Destroyed Line Item Description Amount Amount $350,000 2,950,000 4,440,000 35% b. Which method is used to estimate inventory cost in case of inventory destroyed by fire?
Gross profit method The inventory was destroyed by fire on December 31. The following data were obtained from the accounting records: Jan. 1 Jan. 1 Dec. 31 Inventory Purchases (net) Sales Estimated gross profit rate a. Estimate the cost of the inventory destroyed. Estimated Cost of Merchandise Destroyed Line Item Description Amount Amount $350,000 2,950,000 4,440,000 35% b. Which method is used to estimate inventory cost in case of inventory destroyed by fire?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
7. The inventory was destroyed by fire on December 31. The following data were obtained from the accounting records:
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education