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.
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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