Question

Using the Gross profit method, compute estimated inventory loss based on the following information: Sales: 660,000...

Using the Gross profit method, compute estimated inventory loss based on the following information:

Sales: 660,000

Purchases: 425,000

Freight in: 25,000

Beginning Inventory: 130,000

Gross Margin%: 30%

Business   Accounting   
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Homework Answers

Answer #1

Answer----$118000

Sales

$    6,60,000.00

Gross profit %

30%

Gross profit

$    1,98,000.00

Cost of Goods sold(660000-198000)

$    4,62,000.00

Beginning Inventory

$    1,30,000.00

Add: Purchases

$    4,25,000.00

Add: Freight

$        25,000.00

Subtotal (A)

$    5,80,000.00

Less: Cost of goods sold as calculated above (B)

$    4,62,000.00

Loss of Inventory (A-B)

$    1,18,000.00

Solution is given assuming there is no ending Inventory in hand.

If there was ending inventory the answer would be adjusted with that too. The loss of inventory would have been (118000-ending inventory)

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