Question 1: (20 points) When the old lady Mrs. Louisiana arrived at her old but very cute store on the beautiful spring morning of April 17, 2016, she found empty shelves and display racks, thieves had broken in during the night and stolen the entire inventory. Fortunately, she had insured the inventory and paid the premiums promptly. She immediately called the police and then her insurance company. A representative from the insurance company arrived at the store in half an hour. He politely forwarded some necessary questions and asked the old lady to calm down. He mentioned that as soon as she presents the data about the ending inventory of merchandise, the insurance company is ready for covering the loss due to theft. Mrs. Louisiana employed periodic inventory valuation in her store. She had to count her inventory in order to present any data. However the inventory was stolen and, it was impossible to count the inventory. She called her grandchildren in order to help her valuing the stolen inventory. Her grandchildren asked you to estimate the value of inventory stolen because you took financial accounting in the university. Mrs. Louisiana presented you the following data. Data Source of Data Relevant Date for Value (5) the Data Net Sales Income Statement for the Year Ended 2015 153,500 Purchases Invoice January 5, 2016 33,150 Beginning Opening Trial Balance January 1, 2016 35,800 Merchandise Inventory Cost of Goods Sold Income Statement for the Year Ended 2015 122,800 Purchase Discounts Invoice January 5, 2016 3,150 Net Sales Income Statement for the Year Ended 2014 141.200 Purchases Invoice March 6, 2016 71,750 Transportation-in Invoice January 5, 2016 2.250 Cost of Goods Sold Income Statement for the Year Ended 2014 112,960 Purchase Allowances Invoice March 6, 2016 1.750 Sales Invoice January 15, 2016 15,000 Net Sales Income Statement for the Year Ended 2013 103,600 Transportation in Invoice March 6, 2016 2,750 Purchase Returns Invoice March 6, 2016 5.150 Sales Invoice April 5, 2016 47.500 Cost of Goods Sold Income Statement for the Year Ended 2013 82,880 Net Sales Income Statement for the Year Ended 2012 97,220 Sales Allowances Invoice April 5, 2016 1,200 Cost of Goods Sold Income Statement for the Year Ended 2012 77,776 Net Sales Income Statement for the Year Ended 2011 104,800 Cost of Goods Sold Income Statement for the Year Ended 2011 83,840 Sales Invoice March 10, 2016 25,000 Sales Invoice April 1, 2016 38,000 Sales Discounts Invoice March 10, 2016 2.500 Required: You are required to calculate the value of the stolen inventory using Gross Margin Method. (Hint: Calculate historical gross profit margin first.)
