Question
A fire destroyed a warehouse of the Goren Group, Inc., on May 4, 2016. Accounting records on that date indicated the following: Merchandise inventory, January
| A fire destroyed a warehouse of the Goren Group, Inc., on May 4, 2016. Accounting records on that date indicated the following: |
| Merchandise inventory, January 1, 2016 | $ | 1,900,000 | |
| Purchases to date | 5,800,000 | ||
| Freight-in | 400,000 | ||
| Sales to date | 8,200,000 | ||
| The gross profit ratio has averaged 20% of sales for the past four years. |
| Required: |
| Use the gross profit method to estimate the cost of the inventory destroyed in the fire. |
Estimated loss from fire?
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Access Audit Handbook
Authors: Alison Grant
1st Edition
1859461778, 978-1859461778
