Question

A casualty destroyed a store's inventory. The inventory was not insured. The following data are available through May 21, the date of the casualty.

Sales, January 1 through May 21                           $550,195

Inventory, January 1                                                  100,000

Purchases, January 1 through May 21                     525,018

Markup on cost                                                                25%

Estimate the inventory loss.

Answer 1

Estimate the inventory loss is calculated as follows:

	$
Goods Avaialble for sale
Beging inventory	100,000
Add: Purchases	525,018
Goods Avaialble for sale	625,018
Less: Estimated cost of goods sold
Sales ( $550,195 * 25/125)	440,156
($550,195 - $110,039)
Estimate the inventory loss	$184,862

Estimate the inventory loss is $184,862