Sth Distributors, Inc., supplies ice cream shops with various toppings for makin

Question

Sth Distributors, Inc., supplies ice cream shops with various toppings for making sundaes. On November 17, 2018, a fire resulted in the loss of all of the toppings stored in one section of the warehouse. The company must provide its insurance company with an estimate of the amount of inventory lost. The following information is available from the company's accounting records Fruit Marshmallow Chocolate Toppings Toppings $7,700 43,000 62,000 Toppings 3,700 12,700 20,700 $ 27,000 Inventory, January 1, 2018 Net purchases through Nov. 17 Net sales through Nov. 17 Historical gross profit ratio 185,000 235,000 15% 30% 30 Required: 1. Calculate the estimated cost of each of the toppings lost in the fire Estimated cost of Toppings Fruit Marshmallow Chocolate lost inventory

Explanation / Answer

Calculate estimated cost of lost inventory

Fruit Marshmallow Chocolate Inventory jan 1,2018 27000 7700 3700 Net purchase through nov 17 185000 43000 12700 Less: Sale Through nov 17 (199750) (43400) (14490) Estimated cost of lost inventory 12250 7300 1910

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