Question

A fire destroyed all ABC's merchandise inventory on October 1.

• On January 1 the balance in inventory was: 3008.
• From January 1-October 1
  • sales were 18048
  • purchases were 15521.28
  • the mark up on cost was 40%

• The gross profit margin is :
  
• Estimated COGS of inventory destroyed is:
  
• Estimated inventory destroyed:

Answer 1

Cost of inventory destroyed by fire as on Oct 1	5637.85	(or $5638)
Working Note 1:
Inventory as on jan 1	3,008.00
Add: Net Purchase	15,521.28
Less: COST OF GOODS SOLD	(12,891.43)	(Note 1)
Cost of inventory destroyed by fire as on Oct 1	5,637.85
Note 1: Cost of goods sold
Net Sales	18,048
Less: Gross profit	5,157
Cost of goods sold	12,891