Suppose Base Company began May with inventory of $2,000 and purchased $8,000 worth of inventory during the first half of May. Sales for the first half of May amounted to $12,000. Then, a fire destroyed the remaining inventory. Base Company has had a gross profit ratio of approximately 30% for the first four months of the year. Approximately how much inventory did Base Company lose in the fire?

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Answer 1

Textbook Question

Chapter 5B, Problem 1YT

Suppose Base Company began May with inventory of $2,000 and purchased $8,000 worth of inventory during the first half of May. Sales for the first half of May amounted to $12,000. Then, a fire destroyed the remaining inventory. Base Company has had a gross profit ratio of approximately 30% for the first four months of the year. Approximately how much inventory did Base Company lose in the fire?

Expert Solution & Answer

To determine

Compute the amount of inventory that Company B loses in the fire accident.

Explanation of Solution

Given information:

Inventory at Beginning of Month May is $2,000, Inventory purchased during the first half of the month is $8,000, and sales during the first half of the month are $12,000.

Gross profit percentage is 30% and the remaining inventories are destroyed in the fire which means the ending inventory destroyed in fire.

Ending inventory = Beginning inventory + Purchases – Cost of goods sold= $2,000 + $8,000 – [$12,000 × (1 − 30%)]= $10,000 – [$12,000 × 70%]= $1,600

Therefore, the inventory destroyed in fire is $1,600.

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Students have asked these similar questions

On 1 September 20X6, a business had inventory of $380,000. During the month, sales totalled $650,000 and purchases $480,000. On 30 September 20X6 a fire destroyed some of the inventory. The undamaged goods in inventory were valued at $220,000. The business operates with a standard gross profit margin of 30%. Based on this information, what is the cost of the inventory destroyed in the fire?

On 1st Nov 2020, a business had inventory of $380,000. During the month, sales totalled $650,000 and purchases $480,000. On 30th Nov 2020 a flood destroyed some of the inventory. The undamaged goods in inventory were valued at $220,000. The business operates with a standard gross profit margin of 25%.Based on this information, what is the cost of the inventory destroyed in the flood?

Adams Corporation estimates that it lost $187,200 in inventory from a recent flood. The following information is available from the records of the company's periodic inventory system: beginning inventory, $330,000; purchases and net sales from the beginning of the year through the date of the flood, $570,000 and $880,000, respectively. a. What is the company's gross profit ratio? b. What is the gross profit ratio?

Answer 2

Textbook Question

Chapter 5B, Problem 1YT

Suppose Base Company began May with inventory of $2,000 and purchased $8,000 worth of inventory during the first half of May. Sales for the first half of May amounted to $12,000. Then, a fire destroyed the remaining inventory. Base Company has had a gross profit ratio of approximately 30% for the first four months of the year. Approximately how much inventory did Base Company lose in the fire?

Expert Solution & Answer

To determine

Compute the amount of inventory that Company B loses in the fire accident.

Explanation of Solution

Given information:

Inventory at Beginning of Month May is $2,000, Inventory purchased during the first half of the month is $8,000, and sales during the first half of the month are $12,000.

Gross profit percentage is 30% and the remaining inventories are destroyed in the fire which means the ending inventory destroyed in fire.

Ending inventory = Beginning inventory + Purchases – Cost of goods sold= $2,000 + $8,000 – [$12,000 × (1 − 30%)]= $10,000 – [$12,000 × 70%]= $1,600

Therefore, the inventory destroyed in fire is $1,600.

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Answer 3

Textbook Question

Chapter 5B, Problem 1YT

Suppose Base Company began May with inventory of $2,000 and purchased $8,000 worth of inventory during the first half of May. Sales for the first half of May amounted to $12,000. Then, a fire destroyed the remaining inventory. Base Company has had a gross profit ratio of approximately 30% for the first four months of the year. Approximately how much inventory did Base Company lose in the fire?

Expert Solution & Answer

To determine

Compute the amount of inventory that Company B loses in the fire accident.

Explanation of Solution

Given information:

Inventory at Beginning of Month May is $2,000, Inventory purchased during the first half of the month is $8,000, and sales during the first half of the month are $12,000.

Gross profit percentage is 30% and the remaining inventories are destroyed in the fire which means the ending inventory destroyed in fire.

Ending inventory = Beginning inventory + Purchases – Cost of goods sold= $2,000 + $8,000 – [$12,000 × (1 − 30%)]= $10,000 – [$12,000 × 70%]= $1,600

Therefore, the inventory destroyed in fire is $1,600.

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Answer 4

Textbook Question

Chapter 5B, Problem 1YT

Suppose Base Company began May with inventory of $2,000 and purchased $8,000 worth of inventory during the first half of May. Sales for the first half of May amounted to $12,000. Then, a fire destroyed the remaining inventory. Base Company has had a gross profit ratio of approximately 30% for the first four months of the year. Approximately how much inventory did Base Company lose in the fire?

Expert Solution & Answer

To determine

Compute the amount of inventory that Company B loses in the fire accident.

Explanation of Solution

Given information:

Inventory at Beginning of Month May is $2,000, Inventory purchased during the first half of the month is $8,000, and sales during the first half of the month are $12,000.

Gross profit percentage is 30% and the remaining inventories are destroyed in the fire which means the ending inventory destroyed in fire.

Ending inventory = Beginning inventory + Purchases – Cost of goods sold= $2,000 + $8,000 – [$12,000 × (1 − 30%)]= $10,000 – [$12,000 × 70%]= $1,600

Therefore, the inventory destroyed in fire is $1,600.

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Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

To determine

Compute the amount of inventory that Company B loses in the fire accident.

Explanation of Solution

Given information:

Inventory at Beginning of Month May is $2,000, Inventory purchased during the first half of the month is $8,000, and sales during the first half of the month are $12,000.

Gross profit percentage is 30% and the remaining inventories are destroyed in the fire which means the ending inventory destroyed in fire.

Ending inventory = Beginning inventory + Purchases – Cost of goods sold= $2,000 + $8,000 – [$12,000 × (1 − 30%)]= $10,000 – [$12,000 × 70%]= $1,600

Therefore, the inventory destroyed in fire is $1,600.

Answer 8

Expert Solution & Answer

To determine

Compute the amount of inventory that Company B loses in the fire accident.

Explanation of Solution

Given information:

Inventory at Beginning of Month May is $2,000, Inventory purchased during the first half of the month is $8,000, and sales during the first half of the month are $12,000.

Gross profit percentage is 30% and the remaining inventories are destroyed in the fire which means the ending inventory destroyed in fire.

Ending inventory = Beginning inventory + Purchases – Cost of goods sold= $2,000 + $8,000 – [$12,000 × (1 − 30%)]= $10,000 – [$12,000 × 70%]= $1,600

Therefore, the inventory destroyed in fire is $1,600.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

To determine

Compute the amount of inventory that Company B loses in the fire accident.

Answer 12

Explanation of Solution

Given information:

Inventory at Beginning of Month May is $2,000, Inventory purchased during the first half of the month is $8,000, and sales during the first half of the month are $12,000.

Gross profit percentage is 30% and the remaining inventories are destroyed in the fire which means the ending inventory destroyed in fire.

Ending inventory = Beginning inventory + Purchases – Cost of goods sold= $2,000 + $8,000 – [$12,000 × (1 − 30%)]= $10,000 – [$12,000 × 70%]= $1,600

Therefore, the inventory destroyed in fire is $1,600.

Answer 13

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