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King Edward Antiques, Inc., began August with inventory of $ 4 5 , 4 0 0 . The business made net purchases of $ 3

King Edward Antiques, Inc., began August with inventory of $45,400. The business made net purchases of $36,900 and had net sales of $63,800 before a fire destroyed
the company's inventory. For the past several years, King Edward's gross profit percentage has been 40%.
Read the requirement.
Use the gross margin method to estimate the cost of inventory destroyed.
Cost of goods available
Estimated cost of goods sold:
Less:
Estimated cost of goods sold
Estimated cost of inventory destroyed
Requirement
Estimate the cost of the inventory destroyed by the fire. Identify another
reason that owners and managers use the gross profit method to estimate
inventory.
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