Prepare the required journal entries

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Question 1: A company's warehouse was destroyed by a tornado on March 15. The following information was the only information that was salvaged: 

1. Inventory, beginning: $28,000
2. Purchases for the period: $17,000
3. Sales for the period: $55,000
4. Sales returns for period: $700

The company's average gross profit ratio is 35%. What is the estimated cost of the lost inventory?

Question 2:
MMM Store uses the periodic inventory system and had the following transactions during the month of May:

May 3 Sold merchandisce toa customer on credit for $600, terms 2/10,n/30. The cost of the muerchandise sold was $350.

May 4 Sold merchandise to a customer for cashof $425. The cost of the merchandise was $250.

May 6 Sold merchansice to a customer on credit for $1,300, terms 2/10, n/30. The cost of the merchandise sold was $750.

May 8 The customer from May 3 returned merchanside with a selling prince of $100. The cost of the merchandise returned was $55

May 15 The customer from May 6 paid the full amount due, less any appropriate discounts earned.

May 31 The customer from May 3 paid the full amount due, less any appropriate discournts earned. 

Prepare the required journal entries that MMM Store must make to record these transactions.  

Reference no: EM13115939

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