Question

On March 15, a fire destroyed Interlock Company's a large portion of the firm’s inventory. The inventory on hand as of January 1 totaled $1,650,000. From January 1 through the time of the fire, the company made purchases of $683,000 and had sales of $1,210,000. Damaged inventory has a salvage value of $310,000. Inventory that survived the fire without damage has a sales value of $400,000.

Required: Please show all calculations (in formula form if desired)

Assuming the rate of gross profit to selling price is 30%, what is the approximate value of the inventory loss that was destroyed by the fire?

Answer 1

Opening inventory $1650000 purchases till the date of fire $683000 Sales made were $ 1210000 Gross pro fit is 30.4. of Sales cost of goods sold are = 1210000 - 30% = $ 847000 goods remaining have a sale value = $ 400000 It's cost value is $400000 – 30%. E $280000. Goods available for sale = 23, 33000 (1650000+ 683000) (-) Goods sold are = (847000) e closing stock of goods C&&0000) coft of Goods destroyed by fire 1206000 cost of goods destroyed = $1206000 less & Salwage value ( $ 310000) I loss of Inventory destroyed by fire $896000