Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 97

Use gross profit ratio to calculate inventory loss On April 8, 2010, a flood destroyed the warehouse of Stuco Distributing Co. From the waterlogged records of the company, management was able to determine that the firm’s gross profit ratio had averaged 35% for the past several years and that the inventory at the beginning of the year was $209,600. It also was determined that during the year until the date of the flood, sales had totaled $427,200 and purchases totaled $242,920.

Required:

Calculate the amount of inventory loss from the flood.

Step 1 of 2

Calculate inventory loss by using gross profit ratio

By extracting the information: