Estimating ending inventory (Learning Objective 7) 5–10 min.

Sounds on Wheels sells and installs audio equipment. During a recent fire that occurred at its warehouse, Sounds on Wheels’ entire inventory was destroyed. Sounds on Wheels’

accounting records reflect the following information.

$ 54,000 280,400 425,000 35%

Beginning Inventory.............................................................................................

Net Purchases......................................................................................................

Net Sales..............................................................................................................

Gross Profit Rate .................................................................................................

Requirement 1. Use the gross profit method to estimate the amount of Sounds on Wheels’ inventory loss.

AppendixLO1