Question
When Mary Potts arrived at her store on the morning of January 29, she found empty shelves and display racks; thieves had broken in during
When Mary Potts arrived at her store on the morning of January 29, she found empty shelves and display racks; thieves had broken in during the night and stolen the entire inventory. Accounting records showed that inventory costing $50,000 on January 1. From January 1 to January 29, Potts had made net sales of $70,000 and net purchases of $80,000. The gross profit during the past sev- eral years had consistently averaged 42 percent of net sales. Potts plans to file an insurance claim for the theft loss.
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Does Potts use the periodic inventory method or does she account for inventory using the perpetual method? Defend your answer
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