Question

Help Save & Hw Smith Distributors, Inc., supplies ice cream shops with various toppings for making sundaes. On November 17, 2018, a fire resulted in the loss of all of the toppings stored in one section of the warehouse The company must provide its insurance company with an estimate of the amount of inventory lost. The following information is available from the company's accounting records $ 14,00 Inventory, January 1, 2018 Het purchases throuh Nov. 17 Net sales through Nov. 17 Historical gross profit ratio Required: 1. Calculate the estimated cost of each of the toppings lost in the fire Estimated out of lost inventory Toppings Fruit Marshmallow Chocolate < Pray 5 of 10 Next >

Answer 1

Calculation of Cost of Each of Toppings Lost in the Fire
	Fruit Toppings	Marshmallow Toppings	Chocolate Toppings
Inventory, January 1 , 2018	14,000	6,400	2,400
Net purchases, through Nov. 17	120,000	30,000	11,400
Cost of goods available for sale	134,000	36,400	13,800
Net sales, through Nov. 17	170,000	49,000	19,400
Gross profit ratio	30%	35%	35%
Gross profit	170,000 x 30% = 51,000	49,000 x 35% = 17,150	19,400 x 35% = 6,790
Cost of goods sold (Sales - Gross profit)	119,000	31,850	12,610
Cost of toppings lost in fire ( Cost of goods available for sale - Cost of goods sold)	$15,000	$4,550	$1,190

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