Problem: The inventory of Snider Company was destroyed by fire on April 1. From an examination of the accounting records, the following data for the first three months of the year are obtained:
Sales $225,000
Sales Returns and Allowances 5,000
Purchases 90,000
Freight-In 3,500
Purchase Returns and Allowances 4,000
Required:
Determine the merchandise lost by fire, assuming a beginning inventory of $60,000 and a gross profit rate of 40% on net sales.