Question

On April 15 of the current year, a fire destroyed the entire uninsured inventory of a...

On April 15 of the current year, a fire destroyed the entire uninsured inventory of a retail store. The following data are available:

Sales, January 1 through April 15                                $600,000

Inventory, January 1                                                     200,000

Purchases, January 1 through April 15                           500,000

Purchases Discounts                                                       10,000

Sales Return                                                                    5,000

Freight in                                                                         3,000

Freight out                                                                     10,000

Markup on cost                                                                  25%

            The amount of the inventory loss is estimated to be

217,000

574,000

202,000

532,000

214,000

None of the above.

Homework Answers

Answer #1
Beginning inventory $   200,000
Add: Purchases $   500,000
Less: Purchase discounts $   (10,000)
Less: Cost of goods sold ($600,000/125*100) $ (480,000)
Add: Cost of goods return ($5,000/125*100) $        4,000
Add: Freight in $        3,000
Cost of goods destroyed $   217,000

Answer is A.

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