On September 22, 2018, a flood destroyed the entire merchandise inventory on han

Question

On September 22, 2018, a flood destroyed the entire merchandise inventory on hand in a warehouse owned by the Rocklin Sporting Goods Company. The following information is available from the records of the company's periodic inventory system: Inventory, January 1, 2018 Net purchases, January 1 through September 22 Net sales, January 1 through September 22 Gross profit ratio $152,000 382,000 610,000 20% Required: Complete the below table to estimate the cost of inventory destroyed in the flood using the gross profit method. Beginning inventory Plus: Net purchases Cost of goods available for sale Less: Cost of goods sold: Net sales Less: Estimated gross profit Estimated cost of goods sold Estimated cost of inventory destroyed

Explanation / Answer

Calculate estimated cost of inventory destroyed :

Beginning inventory 152000 Plus : Net purchases 382000 Cost of goods available for sale 534000 Less: Cost of goods sold Net sales 610000 Less: Estimated gross profit -122000 Estimated cost of goods sold -488000 Estimated cost of inventory destroyed 46000

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