Question

Question 6 View Policies Current Attempt in Progress The inventory of Sandhill Co. was destroyed by fire on June 1. From an examination of the accounting records, the following data for the first five months of the year were obtained: Sales 594,000; Sales Returns and Allowances $1,500: Sales Discounts $1.000: Freight Out $2.500, Parches 552.000 52.00 Returns and Allowances $2,700; and Purchase Discounts $1,300. Determine the inventory lost by fire, assuming a beginning inventory of $25,400 and a gross profit margin of 40%. Inventory lost by fires I eTextbook and Media Attempts: 0 of 3 used for Prev Send to Gradebook • Previous 9, te

Answer 1

Ending Inventory = Beginning Inventory + Net Purchases - Cost of goods sold

Net Purchases = Purchases + Freight-in = ($52,000 + $2,600) = $54,600

Net sales = Sales - sales returns & allowances - sales discounts = $94,000 - $1,500 -$1,000 = $91,500

Cost of goods sold = $91,500 * (1 - 0.40) = $54,900

Ending Inventory = $25,400 + $54,600 - $54,900

Ending Inventory = $25,100

Inventory lost by Fire = $25,100