Textbook Problem

Gross Profit Method: Estimation of Theft Loss You are requested by a client on September 28 to prepare an insurance claim for a theft loss that occurred on that day. You immediately take an inventory and obtain the following data:

The inventory on September 28 indicates that an inventory of $15,000 remains after the theft. During the past year, net sales were made at 50% above the cost of goods sold.

Required:

1. 1. Compute the inventory lost during the theft. Round the gross profit percentage to 3 decimal places.
2. 2. Next Level What concerns might you have about the inventory estimation under the gross profit method?