A. Macarty Company's records indicate the following information for the year: $\begin{array}{lr}
\text { Merchandise inventory, } 1 / 1 & \$ 550,000 \
\text { Purchases } & 2,250,000 \
\text { Net sales } & 3,100,000
\end{array}$ On December 31 a physical inventory determined that ending inventory of $600000 was in the warehouse. A. Macarty's gross profit on sales has remained constant at 30%. A. Macarty suspects some of the inventory may have been taken by some new employees. At December 31 what is the estimated cost of missing inventory?
A) $30000
B) $42000
C) $180000
D) $600000

Question

Quizplus · Accepted Answer

The correct answer is A. The estimated cost of missing inventory is $30,000. This is calculated as follows:Beginning inventory: $550,000Purchases: $2,250,000Total goods available for sale: $2,800,000Ending inventory: $600,000Cost of goods sold: $2,200,000Gross profit: $900,000Gross profit percentage: 30%Net sales: $3,100,000Estimated cost of missing inventory: $30,000

A Macarty Company's Records Indicate the Following Information for the Year