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?

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter6: Inventories

Section: Chapter Questions

Problem 7PB: Retail method; gross profit method Selected data on inventory, purchases, and sales for Jaffe Co....

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Lower-of-cost-or market inventory Data on the physical inventory of Moyer Company as of December 31, 20Y9, are presented below. Quantity and cost data from the last purchases invoice of the year and the next-to-the-last purchases invoice are summarized as follows: Instructions Determine the inventory at cost and at the lower of cost or market, using the first-in, first-out method. Record the appropriate unit costs on an inventory sheet and complete the pricing of the inventory. When there are two different unit costs applicable to an item, proceed as follows: 1. Draw a line through the quantity, and insert the quantity and unit cost of the last purchase. 2. On the following line, insert the quantity and unit cost of the next-to-the-last purchase. 3. Total the cost and market columns and insert the lower of the two totals in the LCM column. The first item on the inventory sheet has been completed below as an example.
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