Question 1 - Gross Profit Method
A fire completely destroyed all the inventory of Glisan Lumber Yard on August 5, 20--. Fortunately, the accounting records were not destroyed in the fire. The following information is provided by Glisan Lumber Yard for the time period January 1 through August 5:
Beginning inventory, January 1, 20--$116,000
Net purchases, January 1 through August 5 432,000
Net sales, January 1 through August 5720,000
Normal gross profit as a percentage of sales 40%
Required: Estimate the amount of merchandise inventory destroyed in the fire on August 5 using the gross profit method.
Question 2 - Retail Inventory Method
The following information is provided by Raynette's Pharmacy for the last quarter of its fiscal year ending on March 31, 20:
Cost Retail Inventory, start of period, January 1, 20--$34,000 $51,100 Net purchases during the period180,668 269,300 Net sales for the period261,900
Required:
1. Estimate the ending inventory as of March 31 using the retail inventory method.
2. Estimate the cost of goods sold for the time period January 1 through March 31 using the retail inventory method.