Gross Profit Method The merchandise inventory was destroyed by fire on December 13. The following data were obtained from the accounting records: Jan. 1 Merchandise inventory $350,000 Jan. 1-Dec. 31 Purchases (net) 2,950,000 Sales (net) 4,440,000 Estimated gross profit rate 35% a. Estimate the cost of the merchandise destroyed. Cost of the Merchandise Destroyed b. Briefly describe the situations in which the gross profit method is useful. 1. The gross profit method is useful for estimating inventories for monthly or quarterly financial statements. 2. It is useful in estimating the cost of merchandise destroyed by fire or other disasters. 3. It is useful in reducing the carrying cost of inventory. 4. It is useful in achieving a higher net income.

Q: The following information is available for October for Sandhill Company. (Round answers to 0 decimal…

A: Formula: Gross profit = Net sales - cost of goods sold

Q: Partial income statements for Murphy & Murphy (M & M) reported the following summarized amounts:…

A: Financial statements are the reports that depict the financial performance of an entity. It consists…

Q: In its first month of operations, Literacy for the Illiterate opened a new bookstore and bought…

A: I am only answering the question under FIFO method as it is mentioned in the question. Periodic…

Q: A flood recently destroyed many of the financial records of Rizal Company. The company uses an…

A: Average Cost of Inventory Valuation System:-This is a method of computing inventory by dividing…

Q: On 30 September 20X1 part of the inventory of a company was completely destroyed by fire. The…

A: Here used the concept of Calculating Cost of destroyed inventory

Q: Sandhill Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on…

A: Sales are made at 33 1/3% above cost and totaled $111,000. Let the Cost of Goods sold be $x.…

Q: The following information is available for October for Norton Company. Beginning inventory $400,000…

A: Loss by fire is the loss of those inventories from warehouse which are damaged by fire in the…

Q: Gross Profit Method A flood completely destroyed all the inventory of Bayside Waterworks Company on…

A: Under the gross profit method, the ending inventory is calculated by deducting the cost of goods…

Q: The following information is available for October for Barton Company: Beginning inventory $350,000…

A: Compute the cost of goods sold (COGS): Gross profit on sales 40%  66.67% / (100% + 66.67%)…

Q: An inventory taken the morning after a large theft discloses $60,000 of goods on hand as of March…

A: Loss of stock method: Loss of stock refers to the value of stock in hand after the date of fire or…

Q: A fire on 30 September 20X2 destroyed some of a company's inventory and its inventory records. The…

A: We have the following information: Inventory: $318,000 Sale: $612,000 Purchases: $412,000 Inventory…

Q: 13. A flood recently destroyed many of the financial records of Yakal Company. The entity uses an…

A:

Q: Marigold Inc.’s April 30 inventory was destroyed by the explosion of an underground oil tank.…

A: Gross Profit is profit earned on selling the goods, which is calculated by deducting Cost of goods…

Q: Required information M7-11 to 13 Calculating Cost of Goods Available for Sale, Cost of Goods Sold,…

A: FIFO METHOD:

Q: The merchandise inventory was destroyed by fire on December 13. The following data were obtained…

A:

Q: Marigold Corporation's April 30 inventory was destroyed by fire. January 1 inventory was $164,900,…

A: The inventory valuation method used to evaluate the closing inventory and cost of goods sold. In…

Q: Using the gross profit method, the estimated ending inventory destroyed by fire is a. £34,000. b.…

A: Given information is: Sales = £600000 Percentage markup on cost  = 66.67% Then Cost of goods sold =…

Q: (Gross Profit Method) Tim Legler requires an estimate of the cost of goods lost by fire on March 9.…

A: a. Net Purchases = Purchases for the year - Purchase returns = $72,000 - $2,400 = $69,600 Cost of…

Q: 19. A company count its inventory and arrives at a total of 167,000. The company fears that some…

A: Solution..     Beginning inventory = 150,000 Purchase = 390,000  Sales revenue = 600,000  Gross…

Q: The following information is available for October for Wildhorse Company. (Round answers to O…

A: Let cost = 100 Gross profit = 100*66.67% Gross profit = 66.67   Sales = 100 + 66.67 Sales = 166.67…

Q: Scotland Inc. incurred a fire loss. Select information follows:   Gross profit: Markup on cost…

A: The gross profit method is the method that helps in estimating the value of inventory considering…

Q: Gross Profit Method A flood completely destroyed all the inventory of Bayside Waterworks Company on…

A: Merchandise Inventory destroyed due in the flood = Beginning Inventory + Net Purchases - Cost of…

Q: Harry Company's records indicate the following information: Merchandise inventory, January 1, 20X7…

A: Trading Account will be prepared to computer the estimated cost of missing inventory. Under this…

Q: The following information is available for July for Aluminum Company. Beginning inventory Net…

A: Ending Inventory = Beginning Inventory + Purchases - Cost of goods sold   Cost of goods sold =…

Q: Required information M7-11 to 13 Calculating Cost of Goods Available for Sale, Cost of Goods Sold,…

A: FIFO METHOD:

Q: Blue Spruce Corporation's March 31 inventory was destroyed by fire. January 1 inventory was…

A: We assume that all the inventory of 31 March was destryed by the fire.

Q: The physical count of the inventory of Great Goods Company on December 31 was determined as a total…

A: The inventory at end shows the balance of inventory which belongs to the business, even if it is in…

Q: On 1 September 20x6, a business had inventory of $380,000. During the month, sales totalled $650,000…

A: We have the following information: Opening Inventory: $380,000 Sales: $650,000 Purchases: $480,000…

Q: 4. On the eve of February 14, a fire destroyed the entire merchandise inventory of Dee…

A: "Since you have asked multiple questions, we will answer only first question for you. If you want…

Q: Gross Profit Method The inventory was destroyed by fire on December 31. The following data were…

A: Cost of goods available for sale = Opening Inventory + Purchases during the period = 350000 +…

Q: 5. The following information is available for October for Barton Company. Beginning inventory €…

A: >Generally there is a record kept for the ending inventory.>But sometime, due to certain…

Q: st was $30,000 on January 1. Its retail value is $42,000. During the year, Bob's Clothing Shop…

A: Using the cost to retail price ratio, the retail method is used to evaluate the value of ending…

Q: Gross profit method - GPR based on sales - - On Nov. 29, 20x1, a meteorite struck the warehouse of…

A: Inventory means the goods in which business deals. Inventory can be calculated by preparing the…

Q: 39.The Hong Yoo-chan Company counted its ending inventory on December 31. None of the following…

A: The ending inventory considers all inventory sold or purchase is in transit and shipped before the…

Q: On 30 September 20X1 part of the inventory of a company was completely destroyed by fire. The…

A: Gross Profit (130,000 * 30%) = 39,000

Q: On 30 September 20X1 part of the inventory of a company was completely destroyed by fire. The…

A: Trading Account will be prepared to identify the cost of the inventory destroyed in a particular…

Q: Y Wholesale Company began the year with merchandise inventory of $9,000. During the year, Y…

A: Inventory sold = Beginning merchandise inventory + Net Merchandise inventory purchased - Ending…

Q: 9. A flood recently destroyed many of the financial records of Yakal Company. The entity uses an…

A: The question is based on the concept of cost accounting. As per the Bartleby guidelines we are…

Q: Sandhill Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on…

A: Cost of goods sold= sales - Sales x Gross profit ratio = $111000 - 111000*33.33% = $74,000

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.