Exercise 9-8 Gross profit method [LO9-2] On September 22, 2018, a flood destroye

Question

Exercise 9-8 Gross profit method [LO9-2] 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 $145,000 375,000 575,000 25% 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: CD Net sales Less: Estimated gross profit Estimated cost of goods sold eD Estimated cost of inventory

Explanation / Answer

Particulars Amount ($) Beginning Inventory $145,000 Plus: Net Purchases $375,000 Cost of goods available for sale $520,000 Less: Cost of goods sold Net Sales $575,000 Less: Estimated Gross Profit $143,750 Estimated Cost of goods sold $431,250 Estimated Cost of inventory destroyed $88,750

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