In the early morning on July 1, 2011, Kiwi Express Company had a major fire. All of the inventory was destroyed. In order to complete the insurance claim, the accountant needed an estimate of the inventory that had been on the premises at the time of the fire. A search through the accounting records (which, luckily, had been kept in another building that was not destroyed by the fire) produced the following information:
2011 cost-to-sales ratio of………………………………. 58%
Purchases for the year up to June 30…………………….$1,524,000
Sales for the year up to June 30…………………………$2,333,148
Inventory on hand on January 1, 2011…………………. $416,160

Required:
a. Assuming the 2010 cost-to-sales ratio is appropriate for 2011, calculate how much inventory should have been on hand on June 30, 2011.
b. Assuming the 2011 cost-to-sales ratio was closer to 65%, calculate how much inventory should have been on hand on June 30, 2011.
c. What factors could make the estimate of ending inventory inaccurate?
d. If the company had another site where it had additional inventory that was not destroyed, how would you factor the value of this inventory into your calculation?