Estimation of Fire Loss On September 28, 2013, a fire destroyed the entire merch

Question

Estimation of Fire Loss

On September 28, 2013, a fire destroyed the entire merchandise inventory of Carroll Corporation. The following information is available:

What is the estimated inventory on September 28, 2013, immediately prior to the fire?

CARROLL CORPORATION

Calculation of estimated inventory on

September 28, 2013 (prior to the fire)

Beggining Inventory            $       150000

Purchases on Hand                    $          ?

Cost of goods available for sale    $          ?

Less: Cost of good sold               $          ?

Inventory on hand September 28

and destroyed by fired                  $          ?

Explanation / Answer

Beggining Inventory            $       150000

Purchases on Hand                    $ 465,000

Cost of goods available for sale    $ =150,000+465,000=$615,000

Markek up percentage =20%

(sales-cogs)/cogs=20%

COGS=sales/1.2

Less: Cost of good sold               $ 450,000

Inventory on hand September 28 =465000-450000=$15,000

and destroyed by fired                  $ 15,000

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