The inventory was destroyed by fire on December 31 The follo

The inventory was destroyed by fire on December 31. The following data were obtained from the accounting records: nventory Purchases (net) Sales Estimated gross profit rate 350,000 2,950,000 4,440,000 35% Jan. 1 Jan. 1 to Dec. 31 A. Estimate the cost of the inventory destroyed. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.

Solution

Calculate estimate cost of inventory destroyed :

Estimated the cost of inventory destroyed = $414000

Beginning inventory		350000
Purchase (net)		2950000
Cost of goods available for sale		3300000
Less: Cost of goods sold
Sales	4440000
Less: Gross profit	-1554000	-2886000
Inventory on hand , December 31		414000