On March 15, a fire destroyed Interlock Company's entire retail inventory. The inventory on hand as...
- On March 15, a fire destroyed Interlock Company's entire retail inventory. The inventory on hand as of January 1 totaled $3,800,000. From January 1 through the time of the fire, the company made purchases of $2,500,000 , and had sales of $2,820,000. Assuming the rate of gross profit to selling price is 40%, what is the approximate value of the inventory that was destroyed?
Homework Answers
Ending Inventory = Beginning Inventory + Net purchases - Cost of Goods sold
Ending Inventory = $3,800,000 + $2,500,000 - [$2,820,000 * (1 - 0.40)]
Ending Inventory = $3,800,000 + $2,500,000 - $1,692,000
Ending Inventory = $4,608,000
Value of the Inventory that was destroyed is $4,608,000
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