Estimate cost of the merchandise destroyed

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Reference no: EM13144010

The merchandise inventory was destroyed by fire on August 19th. The following data were obtained from the accounting records.

Jan 1 Merchandise inventory $360,000
Jan 1-Aug 19 Purchases (net) 3,200,000
Sales (net) 5,200,000

Estimated gross profit rate 36%

a. Estimate the cost of the merchandise destroyed

b. Briefly descrive the situations in which the gross profit method is useful

Reference no: EM13144010

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