Blue Corporation’s April 30 inventory was destroyed by fire. January 1 inventory was $155,000, and purchases for January through April totaled $467,300. Sales revenue for the same period was $684,500. Blue’s normal gross profit percentage is 25% on sales. Using the gross profit method, estimate Blue’s April 30 inventory that was destroyed by fire. Estimated ending inventory destroyed in fire __ $.

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aristeus aristeus · Answer 1 · 2019-12-13T09:08:45+01:00

Answer:

Ending inventory will be $108925

Explanation:

We have to find the estimated ending inventory

It is given by

Estimated ending inventory = Cost of Goods available for sale - Cost of Goods Sold

Cost of Goods available for sale = $155,000+$467,300 = $622,300

Cost of Goods Sold = Sales - Gross profit = [tex]654500-\frac{654500\times 25}{100}=$513375[/tex]

So ending inventory = $622300 - $513375 = $108925

So ending inventory will be $108925