Question: On August 17, the companys inventory was destroyed in a hurricane-related flood. For insurance purposes, the company must reliably estimate the amount of inventory on

On August 17, the company’s inventory was destroyed in a hurricane-related flood. For insurance purposes, the company must reliably estimate the amount of inventory on hand on August 17. The company uses a periodic inventory system. The following data have been assembled:
Inventory, January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,650,000
Purchases, January 1–August 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,130,000
Sales, January 1–August 17 . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . 6,500,000
Historical gross profit percentages:
Last year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60%
Two years ago . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65%
Estimate the company’s inventory as of August 17 using (1) last year’s gross profit percentage and (2) the gross profit percentage from two years ago.

Step by Step Solution

★★★★★

3.43 Rating (172 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

1 and 2 Last Year Two Years Ago Sales 6500000 6500000 Cost of goods sold estimated 2... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

75-B-M-A-I (636).docx

120 KBs Word File

Students Have Also Explored These Related Managerial Accounting Questions!

Instructions: Match the tectonic structures depicted on the Wilson Cycle above to the descriptions listed in the answer choices. Tectonic Structure No. 1 continental rift valley Tectonic Structure...

On July 23, the companys inventory was destroyed in a hurricane-related flood. For insurance purposes, the company must reliably estimate the amount of inventory on hand on July 23. The company uses...

Following data have been obtained for machining AA390 Aluminum, a Si-Al alloy. Compute the K and n values for the Taylor tool life equation. How do these n values compare to the typical values?...

Chad owned an office building that was destroyed in a tornado. The adjusted basis of die building at the time was $890,000. After the deductible, Chad received an insurance check for $850,000. He...

Estimating Inventory On August 17, the companys inventory was destroyed in a hurricane-related flood. For insurance purposes, the company must reliably estimate the amount of inventory on hand on...

Yamus d IOhnal groSS pront Gross Profit Method On July 23, the company's inventory was destroyed in a hurricane-related flood. For insurance purposes, the company must reliably estimate the amount of...

please answer these questions. every box please Current Attempt in Progress Whispering Company follows the practice of pricing its inventory at LCNRV, on an individual item basis. Item No. Quantity...

I have attached the questions that I need answered. I appreciate any help that you can offer. Exercise 9-3 Michael Bolton Company follows the practice of pricing its inventory at the...

Madsen Motors's bonds have 11 years remaining to maturity. Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 9%; and the yield to maturity is 5%. What is the bond's...

T.J. Carlin has the following transactions during August of the current year. Journalize the transactions based on the data below. Aug. 1 Opens an office as a financial advisor, investing $8,410 in...

Let's Try This Suggested Time Allotment: 1 5 Minutes Try to remember that last time you felt valued by others and the way you made others felt valued. Identify the incidents, your thoughts or ideas...

A 50.0-kg block and a 100-kg block are connected by a string as in Figure P8.36. The pulley is frictionless and of negligible mass. The coefficient of kinetic friction between the 50.0 kg block and...

Meanwhile Company produces three models of aluminum skateboards. The models have minor differences, but their processing operations and production costs are identical. During June, these costs were...

Data for Espresso Health Care for July are provided in Problems 3-1 and 3-2. Instructions Prepare an income statement, retained earnings statement, and a classified balance sheet for July. The notes...

Suppose a firms common stock paid a dividend of $2 yesterday. You expect the dividend to grow at the rate of 5% per year for the next 3 years; if you buy the stock, you plan to hold it for 3 years...

Michelle Gutierrez, manager of the Components Division of FX Corporation, is considering a new investment for her division. The division has an investment base of $4,000,000 and operating income of...

How does IFRS define a group? (section 16.2.2)

Garcon Inc. manufactures electronic products, with two operating divisions, the Consumer and Commercial divisions. Condensed divisional income statements, which involve no intracompany transfers and...

The Eastern District of Adelson Inc. is organized as a cost center. The budget for the Eastern District of Adelson Inc. for the month ended December 31, 2014, is as follows: Sales salaries...

Thomas Railroad Company organizes its three divisions, the North (N), South (S), and West (W) regions, as profit centers. The chief executive officer (CEO) evaluates divisional performance, using...

How do you calculate the expected value for this goodness of fit test? The Frequency is the observed value how do you compute the expected value in this problem from that The results of a recent...

Conduct the hypothesis test and provide the test statistic and the critical value, and state the conclusion. A person randomly selected 100 checks and recorded the cents portions of those checks. The...

What's the future value of $250,000 after 3 vears if it earns 26% annuallv? What's the present value of $90,000 to be received in 3 years if the annual interest i What annual interest rate would...