The Zeon Company had a flood on July 5, 2020, that destroyed all of its inventory. The
Question:
The Zeon Company had a flood on July 5, 2020, that destroyed all of its inventory. The salvaged accounting records contained the following information:
Sales, January 1 to July 5 ...................................................................................................... $ 737,650
Net merchandise purchased Jan. 1 to July 5 ........................................................................ 414,900
Additional information was determined from the 2019 annual report:
Income statement:
Sales ........................................................................................................................................ $2,122,550
Cost of goods sold ................................................................................................................... 1,337,175
Balance sheet:
Merchandise inventory ............................................................................................................. 131,200
Zeon was unable to salvage any usable inventory after the water subsided.
Required
Determine the amount of inventory lost by Zeon as a result of the flood. Zeon has a December 31 year-end. Round the gross profit ratio to the nearest whole percentage point.
Step by Step Answer:
Fundamental Accounting Principles Volume I
ISBN: 978-1260305821
16th Canadian edition
Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann