Question

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: Inventory, September 1 $38,000 Sales, September 1-September 28 $51,000 Purchases, September 1-September 28 19,000 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. Compute the inventory lost during the theft. Round the gross profit percentage to 3 decimal places. Beginning inventory Purchases Cost of goods available for sale Cost of goods sold $ 38,000 19,000 $ 57,000 12,750 x $ 23,000 x 15,000 $ 8,000 x Ending inventory before theft Ending inventory after theft Inventory lost →

Answer 1

Solution

Beginning inventory	$        38,000
Purchases	$        19,000
Cost of goods available for sale	$        57,000
Cost of goods sold	$        34,000
Ending Inventory before theft	$        23,000
Ending inventory after theft	$        15,000
Inventory lost	$          8,000

Cost of goods sold is (50/75) 66.667%