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Gross Profit Method. A tsunami destroyed Kyoto Company’s warehouse and all of its inventory Kyoto’s prior-year balance sheet reported ending inventory totaling $5,097. Kyoto’s management believes that last year’s gross profit percentage is a good estimate of the gross profit in the current year. Kyoto’s sales last year were $48,540 and its cost of goods sold was $27,490. Before the tsunami Kyoto’s net sales were $28,903 and Kyoto purchased $18,005 of inventory. Of the inventory purchased, $45 had not yet been delivered to Kyoto. Round percentages to one decimal place Use the gross profit method to determine the following:
Required
- a. What is Kyoto’s historical gross profit percentage?
- b. What is Kyoto’s estimated cost of goods sold?
- c. What is Kyoto’s estimated gross profit?
- d. What is Kyoto’s estimated ending inventory?
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Intermediate Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (2nd Edition)
- On 1st Nov 2020, a business had inventory of $380,000. During the month, sales totalled $650,000 and purchases $480,000. On 30th Nov 2020 a flood destroyed some of the inventory. The undamaged goods in inventory were valued at $220,000. The business operates with a standard gross profit margin of 25%.Based on this information, what is the cost of the inventory destroyed in the flood?arrow_forwardAFW inc. reported these figures for its fiscal year (amounts in millions): Net sales $2,100 Cost of goods sold $1,140 Ending inventory $330 Suppose AFW later learns that ending inventory was overstated by $8 million. What are the correct amounts for a) Net sales b) Ending inventory c) Cost of goods sold d) Gross profitarrow_forwardAdams Corporation estimates that it lost $75,000 in inventory from a recent flood. The following information is available from the records of the company’s periodic inventory system: beginning inventory, $150,000; purchases and net sales from the beginning of the year through the date of the flood, $450,000 and $700,000, respectively. What is the company’s gross profit ratio? Gross profit ratio Choose Numerator: Choose Denominator: Gross profit ratio / = Gross profit ratio / =arrow_forward
- Marigold Corporation's April 30 inventory was destroyed by fire. January 1 inventory was $164,900, and purchases for January through April totaled $492,600. Sales revenue for the same period was $686,300. Marigold's normal gross profit percentage is 25% on sales. Using the gross profit method, estimate Marigold's April 30 inventory that was destroyed by fire. Estimated ending inventory destroyed in firearrow_forwardA fire in July, just before the year-end physical inventory, destroyed the majority of GH Corporation's inventory. The retrieved company’s record is indicated below. Beginning Inventory USD 1, 550,000 Purchases for the year USD 4, 070,000 Purchase returns USD 290,000 Sales USD 5, 865, 000 Sales Returns USD 213, 000 Gross margin rate on cost 24% Compute for the estimated gross profit of GH Corp and the amount of inventory loss due to fire.arrow_forwardGecelle Company reported during the current year beginning inventory P500,000, net purchasesP2,500,000 and net sales P3,200,000. A physical count at year-end resulted in an inventory of P575,000.The gross profit on sales had remained constant at 25%. The entity suspected that sme inventory mayhave been taken by a new employee.What is the estimated cost of missing inventory at year-end?arrow_forward
- Blue Corporation's April 30 inventory was destroyed by fire. January 1 inventory was $155,000, and purchases for January through April totaled $467,300. Sales revenue for the same period was $684,500. Blue's normal gross profit percentage is 25% on sales. Using the gross profit method, estimate Blue's April 30 inventory that was destroyed by fire. Estimated ending inventory destroyed in fire $arrow_forwardMarigold Inc.’s April 30 inventory was destroyed by the explosion of an underground oil tank. January 1 inventory was $324,000 and purchases for January through April totalled $797,000. Sales for the same period were $1.1 million. Marigold 's normal gross profit percentage is 30%.Using the gross profit method, estimate the amount of Marigold 's April 30 inventory that was destroyed. Estimated ending inventory destroyed in explosionarrow_forwardEbbers Corporation overstated its ending inventory balance by $15,000 in the current year. What impact will this error have on cost of goods sold and gross profit in the current year and following year?arrow_forward
- Swifty Corporation’s April 30 inventory was destroyed by fire. January 1 inventory was $159,400, and purchases for January through April totaled $504,000. Sales revenue for the same period was $671,100. Swifty’s normal gross profit percentage is 35% on sales.Using the gross profit method, estimate Swifty’s April 30 inventory that was destroyed by fire. Estimated ending inventory destroyed in fire $enter a dollar amount of estimated ending inventory destroyed in firearrow_forwardHoward's Supply Co. suffered a fire loss on April 20, 2021. The company's last physical inventory was taken January 30, 2021, at which time the inventory totaled $237,000. Sales from January 30 to April 20 were $617,000 and purchases during that time were $467,000. Howard's consistently reports a 25% gross profit. The estimated inventory loss is: Multiple Choice $498,250. $229,250. $241,250. None of these answer choices are correct.arrow_forwardCalifornia Inc., through no fault of its own, lost an entire plant due to an earthquake on May 1, 2021. In preparing its insurance claim on the inventory loss, the company developed the following data: Inventory January 1, 2021, $410,000; sales and purchases from January 1, 2021, to May 1, 2021, $1,160,000 and $895,000, respectively. California consistently reports a 35% gross profit. The estimated inventory on May 1, 2021, is: Multiple Choice O C O $551,000. $611,000. $516,000. $552,400.arrow_forward
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