Question:
Mcgriff requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was 76,000. Purchases since January 1 were $144000; freight-in, $6800; purchase returns and allowances, $4800. Sales are made at 25% above cost and totaled $200000 to March 9. Goods costing $21,800 were left undamaged by the fire; remaining goods were destroyed.
Instructions
1) Compute the cost of goods destroyed
2) Compute the cost of goods destroyed, assuming that the gross profit is 25% of sales