The Memphis Pecan Company experienced a tornado that destroyed the company\'s en

Question

The Memphis Pecan Company experienced a tornado that destroyed the company's entire On April 24 of the current year, inventory. At the beginning of April, the company reported beginning i the date of the tornado) was $199,500. Sales for the month of April through April 24 were $644,200 Assuming the c iventory of $228,450 Inventory purchased during April unt ompany's typical gross profit ratio is 50%, estimate the amount of inventory destroyed in the tornado. Multiple Choice 06 322100 $158638 $105.850 213,975 216.250

Explanation / Answer

Answer is $ 105,850.

The explanation is as follows:

Sales     $ 644,200 Gross profit ratio 50% on sales Gross Profit (644,200 *50%) = $ 322,100 Cost of Goods sold (Sales -Gross Profit) = $ 322,100 Inventory held on the date of fire: Opening Inventory 228450 Add: Purchases during the month 199500 Less: Cost of Goods sold 322100 Inventory held on date of fire 105850 Amount of loss 105,850

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