26. V ery Thin Paper Company purchases timber as raw materials inventory in its paper manufacturing business. Very Thin signed a contract in early 2017 for timber cutting rights valued at $5,000,000. The timber was to be cut in 2018. As of December 31, 2017, the market price of the timber cutting rights was $3,000,000. VeryThin made the appropriate adjusting entry for December 31, 2017. When VeryThin cuts the timber in 2018 at a cost of $5,000,000, market prices had not changed from December 31, 2017 Its entry when it cuts the a debit Inventory 3,000,000 b. credit Estimated Liability on Purchase Commitments $2,000,000 c. credit Cash $3,000,000 d. credit Loss on Purchase Commitments $2,000,000 e. debit Estimated Liability on Purchase Commitments $3,000,000 would include: On October 31, a fire destroyed PH Inc.'s entire retail inventory. The inventory on hand as of January 1 totaled $2,720,000. From January 1 through the time of the fire, the company made purchases of $660,000 and had sales of $1,440,000. Assuming the rate of gross profit to selling price is 40%, what is the approximate value of the inventory that was 27. a. $2,720,000 b. $2,692,000 c. $1,940,000 d. $2,516,000 e. $2,351,429 Refer to question 27 above. Compute the cost of the ending inventory assuming gross profit is 40% of cost. a. $2,720,000 b. $2,692,000 c. $1,940,000 d. $%2,516,000 e $2,351,429 28