The Walnut Shop is a furniture company that uses a periodic inventory system. On Feb 8, 2009, a fire destroyed all the furniture on display in the company's main showroom. Fortunately, 35,000 of the company's inventory was located in a separate warehouse and was not damaged by the fire.
Walnut shop now is attempting to determine the cost of the merchandise destroyed in the fire from the following information:
Net sales during 2009, through February 8 450,000
Ending inventory, Dec 31, 2008 130,000
Purchases in 2009 through Feb 8 225,000
Historical rate of gross profit 45%
Compute the following (show computations):
a) the cost of goods available for sale through Feb. 8, 2009
b) the cost of goods sold in 2009 through February 8
c) the estimated total inventory on hand on February 8, prior to the fire
d) the cost of the inventory lost in the fire