Please show calculations Southern California Inc., through no fault of its own,

Question

Please show calculations

Southern California Inc., through no fault of its own, lost an entire plant due to an earthquake on May 1, 2011. In preparing their insurance claim on the inventory loss, they developed the following data: Inventory January 1, 2011, $300,000; sales and purchases from January 1, 2011, to May 1, 2011, $1,300,000 and $875,000, respectively. Southern California consistently reports a 40% gross profit. The estimated inventory on May 1, 2011, is: A. $302,500. B. $360,000. C. $395,000. D. $455,000.

Explanation / Answer

Beginning Inventory            $300,000
Add : Purchases                 $875,000
Total goods available      $1,175,000
Less : COGS                      $780,0001
                                                    
Ending Inventory            $395,000

1COGS  = $1,300,000 x (100% - 40%) = $780,000

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.