Quigley Company\'s records indicate the following information for the year: Merc
ID: 2434282 • Letter: Q
Question
Quigley Company's records indicate the following information for the year:
Merchandise inventory, 1/1
$550,000
Purchases
2,250,000
Net Sales
3,000,000
On December 31, a physical inventory determined that ending inventory of $600,000 was in the warehouse. Quigley's gross profit on sales has remained constant at 30%. Quigley suspects some of the inventory may have been taken by some new employees. At December 31, what is the estimated cost of missing inventory?
$700,000
$200,000
$300,000
$100,000
Merchandise inventory, 1/1
$550,000
Purchases
2,250,000
Net Sales
3,000,000
Explanation / Answer
$100,000. Take the beginning inventory ($550,000) plus purchases ($2,250,000) = $2,800,000 minus cost of goods sold ($3,000,000-30% = $2,100,000) so $2,800,000-$2,100,000= $700,000 then you have to figure they still have $600,000 in inventory so you have to minus this out. $700,000-$600,000= $100,000.
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