Question

# On July 8, a fire destroyed the entire merchandise inventory on hand of Larrenaga Wholesale Corporation....

On July 8, a fire destroyed the entire merchandise inventory on hand of Larrenaga Wholesale Corporation. The following information is available:

 Sales, January 1 through July 8 \$ 691,000 Inventory, January 1 130,000 Purchases, January 1 through July 8 654,000 Gross profit ratio 26 %

What is the estimated inventory on July 8 immediately prior to the fire?

Sales = \$691,000

Gross profit ratio = 26%

Gross profit = Sales x Gross profit ratio

= 691,000 x 26%

= \$179,660

Cost of goods sold = Sales - Gross profit

= 691,000-179,660

= \$511,340

Cost of goods sold = Inventory, January 1 + Purchases- Ending inventory

511,340 = 130,000+654,000-Ending inventory

Ending inventory = \$272,660

the estimated inventory on July 8 immediately prior to the fire is \$272,660

Please give a positive rating if you are satisfied with this solution and if you have any query kindly ask.Thanks!!!

#### Earn Coins

Coins can be redeemed for fabulous gifts.