The inventory of Hang company was destroyed by fire on March 1. From an examination of the accounting records, the following data for the first 2 months of the year are obtained. Sales Revenue $51,000, Sale Returns and Allowances $1,000, purchases $31,200. Freight-In $1,200, and purchase Returns and Allowances $1,400.
Instructions
Determine the merchandise lost by fire, assuming.
- A beginning inventory of $20,000 and a gross profit rate of 30% on net sales.
- A beginning inventory of $30,000 and a gross profit rate of 40% on net sales.
Solution
a.
Hang company
Gross Profit Method
Calculation of ending inventory lost by fire
Gross Profit Method
Calculation of ending inventory lost by fire
b.
Hang company
Gross Profit Method
Calculation of ending inventory lost by fire
Gross Profit Method
Calculation of ending inventory lost by fire
