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Confucius Bookstore’s inventory is destroyed by a fire on September 5.

The following data for the current year are available from the accounting records.

Beginning inventory, Jan. 1 $ 190,000

Jan. 1 through Sept. 5 purchases (net) $ 352,000

Jan. 1 through Sept. 5 sales (net) $ 685,000

Current year's estimated gross profit rate 44 %

Estimate the cost of the inventory destroyed.

Respuesta :

Answer and Explanation:

Cost of goods sold formula:

Opening inventory + purchases - ending inventory

Cost of purchases:

Opening inventory + purchases = 190000 + 352000 = $542,000

Cost of goods sold

= 685,000 - (44% x 685,000) = 383,600

Net sales =               685,000

Less: COGS =           383600

Gross Profit =            301400

Inventory loss = 542000 - 383,600 = $158,400

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