Liis Company lost 70% of its inventory in a fire on March 25, 2014. The accounting records showed the following gross profit data for February and March.

Liis Company is fully insured for fire losses but must prepare a report for the insurance company.

Instructions
(a) Compute the gross profit rate for the month of February.
(b) Using the gross profit rate for February, determine both the estimated total inventory and inventory lost in the fire inMarch.

Transcribed Image Text:

Net sales Net purchases Freight-in Beginning inventory Ending inventory February $300,000 176,800 3,900 4,500 20,200 March (to 3/25) $250,000 139,000 3,000 20,200