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On March 15, a fire destroyed Interlock Company's entire retail inventory. The inventory on hand as...

On March 15, a fire destroyed Interlock Company's entire retail inventory. The inventory on hand as of January 1 totaled $6,600,000. From January 1 through the time of the fire, the company made purchases of $2,732,000, incurred freight-in of $312,000, and had sales of $4,840,000. Assuming the rate of gross profit to selling price is 30%, what is the approximate value of the inventory that was destroyed?

A. $9,644,000. B. $6,256,000. C. $5,944,000. D. $8,192,000.

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Answer #1

Your required answer is option B i.e. $6,256,000

Explanation:

Note: Freight incurred is a part of inventory cost and therefore it would be included for the purpose of calculation of Inventory value.

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