>> Accounting Basics
Question 1 - Gross Profit Method
A fire completely destroyed all the inventory of Glisan Lumber Yard on August 5, 20--. Fortunately, the accounting records were not destroyed in the fire. The following information is provided by Glisan Lumber Yard for the time period January 1 through August 5:
Beginning inventory, January 1, 20--$116,000
Net purchases, January 1 through August 5 432,000
Net sales, January 1 through August 5720,000
Normal gross profit as a percentage of sales 40%
Required: Estimate the amount of merchandise inventory destroyed in the fire on August 5 using the gross profit method.
Question 2 - Retail Inventory Method
The following information is provided by Raynette's Pharmacy for the last quarter of its fiscal year ending on March 31, 20:
Cost Retail Inventory, start of period, January 1, 20--$34,000 $51,100 Net purchases during the period180,668 269,300 Net sales for the period261,900
1. Estimate the ending inventory as of March 31 using the retail inventory method.
2. Estimate the cost of goods sold for the time period January 1 through March 31 using the retail inventory method.