The inventory of Susan Company was destroyed by fire on March 1. From an examination of the

Question:

The inventory of Susan Company was destroyed by fire on March 1. From an examination of the accounting records, the following data for the first 2 months of the year are obtained: Sales $\$ 51,000$, Sales Returns and Allowances $\$ 1,000$, Purchases $\$ 28,200$, Freight-in $\$ 1,200$, and Purchase Returns and Allowances $\$ 1,400$.

\section*{Instructions}

Determine the merchandise lost by fire, assuming:

(a) A beginning inventory of $\$ 20,000$ and a gross profit rate of $30 \%$ on net sales.

(b) A beginning inventory of $\$ 25,000$ and a gross profit rate of $25 \%$ on net sales.

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