Bao Company lost all of its inventory in a fi re on December 26, 2017. The accounting records showed the following gross profi t data for November and December. December November (to 12/26) Net sales $600,000 $700,000 Beginning inventory 32,000 36,000 Purchases 389,000 420,000 Purchase returns and allowances 13,300 14,900 Purchase discounts 8,500 9,500 Freight-in 8,800 9,900 Ending inventory 36,000 ? Bao is fully insured for fi re losses but must prepare a report for the insurance company. Instructions (a) Compute the gross profi t rate for November. (b) Using the gross pr
Bao Company lost all of its inventory in a fi re on December 26, 2017. The accounting records showed the following gross profi t data for November and December. December November (to 12/26) Net sales $600,000 $700,000 Beginning inventory 32,000 36,000 Purchases 389,000 420,000 Purchase returns and allowances 13,300 14,900 Purchase discounts 8,500 9,500 Freight-in 8,800 9,900 Ending inventory 36,000 ? Bao is fully insured for fi re losses but must prepare a report for the insurance company. Instructions (a) Compute the gross profi t rate for November. (b) Using the gross pr
Chapter10: Inventory
Section: Chapter Questions
Problem 13PA: Company Elmira reported the following cost of goods sold but later realized that an error had been...
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Question
Bao Company lost all of its inventory in a fi re on December 26, 2017. The accounting records showed the following gross profi t data for November and December.
December
November (to 12/26)
Net sales $600,000 $700,000
Beginning inventory 32,000 36,000
Purchases 389,000 420,000
Purchase returns and allowances 13,300 14,900
Purchase discounts 8,500 9,500
Freight-in 8,800 9,900
Ending inventory 36,000 ?
Bao is fully insured for fi re losses but must prepare a report for the insurance company.
Instructions
(a) Compute the gross profi t rate for November.
(b) Using the gross profi t rate for November, determine the estimated cost of the inventory
lost in the fi re.
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