On September 22, 2018, a flood destroyed the entire merchandise inventory on han

Question

On September 22, 2018, a flood destroyed the entire merchandise inventory on hand in a warehouse owned by the Rocklin Sporting Goods Company. The following information is available from the records of the company’s periodic inventory system: Inventory, January 1, 2018 $ 142,000 Net purchases, January 1 through September 22 372,000 Net sales, January 1 through September 22 560,000 Gross profit ratio 30 % Required: Complete the below table to estimate the cost of inventory destroyed in the flood using the gross profit method.

Explanation / Answer

estimate the cost of inventory destroyed in the flood using the gross profit method.

Estimate cost of inventory destroyed = $6722000

Beginning inventory 142000 Net purchase 22372000 Cost of goods available for sale 22514000 Less: Cost of goods sold Net Sales 22560000 Less: Gross profit -6768000 Cost of goods sold -15792000 Ending estimated inventory 6722000

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