The Zeon Company had a flood on July 5, 2020, that destroyed all of its inventory. The

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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.

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Fundamental Accounting Principles Volume I

ISBN: 978-1260305821

16th Canadian edition

Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann

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