Question

Che Quebec Traffic Company had a fire on March 10, 2020, that destroyed a major portion of its inventory. The salvaged accounting records contained the following information: Sales, January 1 to March 10 $ 345,600 Net merchandise purchased January 1 to March 10 177,400 Additional information was determined from the 2019 annual report: Income statement: Sales $3,280,000 Cost of goods sold 1,869,600 Balance sheet: Merchandise inventory 289,100 Quebec Traffic was able to salvage inventory with a cost of $106,100. Required: Determine the amount of inventory lost by QuebecWraffic as a result of the fire. Quebec Traffic has a December 31 year-end. (Round the "Gross profit ratio" to the nearest whole percent.) Amount of inventory lost

Answer 1

Year 2019
Sales	$       3,280,000
Cost of goods sold	$       1,869,600
Gross profit	$       1,410,400
Gross profit ratio	Gross profit/Sale
Gross profit ratio	43.00%
Closing inventory	$          289,100
Year 2020
Sale	$          345,600
Gross profit	43.00%	Assumed the same as last year
Gross profit	$          148,608
Cost of goods sold	=345600-148608
Cost of goods sold	$          196,992
Calculation of inventory lost
Opening inventory	$          289,100
Purchase	$          177,400
Less: cost of goods sold	$        (196,992)
Inventory on date of the fire	$          269,508
Less salvaged inventory	$        (106,100)
Inventory lost by the fire	$          163,408