The merchandise inventory of Parks Store was destroyed by fire on July 4. The accounting records were saved. They provided the following information:

The average retail markup over cost of the goods sold during the year before the fire was 50 percent of the acquisition cost.
a Use the gross margin method to estimate the cost of the goods on hand at the time of the fire.
b Give the journal entry to record the loss assuming that it was uninsured.

c Give the journal entry to record the loss assuming that all goods were fully insured for their acquisition cost.

Transcribed Image Text:

Cost of Merchandise Inventory on Hand, January 1 Purchases of Merchandise, January 1 to July 4 Sales, January 1 to July 4 46,000 98,000 120,000