A tsunami destroyed Sugihara Company's warehouse and all of its inventory. Sugihara's prior-year balance sheet reported inventory
Question:
A tsunami destroyed Sugihara Company's warehouse and all of its inventory. Sugihara's prior-year balance sheet reported inventory of $2,853. Sugihara's management believes that last years gross profit percentage is a good estimate of the gross profit in the current year. Sugihara's sales last year were $50,500 and its cost of goods sold was $23,230. Before the tsunami, Sugihara's net sales were $23,000. Sugihara's purchased $20,195 of inventory. Of the inventory purchased, $701 had not yet been delivered to Sugihara.
Requirements Use the gross profit method to determine the following:
a. What is Sugihara's historical gross profit percentage?
b. What is Sugihara's estimated cost of goods sold?
c. What is Sugihara's estimated gross profit?
d. What is Sugihara's estimated ending inventory?
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella