Shereen company report the following information for November and December 2019.
| November | December | |
| Cost of goods purchased | $536,000 | $610,000 |
| Inventory, beginning of month | 130,000 | 120,000 |
| Inventory, end of month | 120,000 | ? |
| Sales revenue | 840,000 | 1,000,000 |
Shereen's ending inventory at December 31 was destroyed in a fire
Instructions
- Compute the gross profit rate for November.
- Using the gross profit rate for November, determine the estimated cost of inventory lost in the fire
Solution
a.
Shereen company
Income Statement
For the month ended November 30, 2019
Income Statement
For the month ended November 30, 2019
b.
Shereen company
Gross Profit Method
Ending Inventory at December 31, 2019
Gross Profit Method
Ending Inventory at December 31, 2019
