The Star Company's inventory was partially destroyed on July 4, 2004, when its warehouse caught on fire early in the morning. Inventory that had a cost of $8,500 was saved. The accounting records, which were located in a fireproof vault, contained the following information. Sales (1/1/04 through 7/3/04) $225,000 Purchases (1/1704 through 7/3/04) 180,000 Inventory (1/1/04) 45,000 Gross Profit Ratio 25% of cost Using the gross profit method, what is the estimated cost of the inventory destroyed by the fire? a. $17,500 b. $25,000 c. $30,000 d. $36,500
The Star Company's inventory was partially destroyed on July 4, 2004, when its warehouse caught on fire early in the morning. Inventory that had a cost of $8,500 was saved. The accounting records, which were located in a fireproof vault, contained the following information. Sales (1/1/04 through 7/3/04) $225,000 Purchases (1/1704 through 7/3/04) 180,000 Inventory (1/1/04) 45,000 Gross Profit Ratio 25% of cost Using the gross profit method, what is the estimated cost of the inventory destroyed by the fire? a. $17,500 b. $25,000 c. $30,000 d. $36,500
Century 21 Accounting Multicolumn Journal
11th Edition
ISBN:9781337679503
Author:Gilbertson
Publisher:Gilbertson
Chapter20: Accounting For Inventory
Section: Chapter Questions
Problem 1CP
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The Star Company's inventory was partially destroyed on July 4, 2004, when its warehouse caught on fire early in the morning. Inventory that had a cost of $8,500 was saved. The accounting records, which were located in a fireproof vault, contained the following information.
Sales (1/1/04 through 7/3/04) | $225,000 |
Purchases (1/1704 through 7/3/04) | 180,000 |
Inventory (1/1/04) | 45,000 |
Gross Profit Ratio | 25% of cost |
Using the gross profit method, what is the estimated cost of the inventory destroyed by the fire?
a. $17,500
b. $25,000
c. $30,000
d. $36,500
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