Prior to a fire that destroyed most of its inventory, Tejada Company had inventory purchases during the period of $40,000 and sales of $125,000. Tejada began the period with $95,000 in inventory. Tejada's typical gross profit percentage is 20 percent. Inventory that cost $5,000 survived the fire. Using the gross profit method, estimate the inventory loss from the fire. (Show your work.)

Assuming the ending inventory for 2013 was overstated, indicate whether each of the following will be:

a.	Understated	c.	Not affected
b.	Overstated

1. Beginning inventory for 2014

2. Cost of goods sold for 2013

3. Stockholders’ equity at the end of 2014

4. Income before income taxes for 2014

5. Stockholders’ equity at the end of 2013

6. Cost of goods sold for 2014

Answer rating: 100% (QA)

1 Beginning inventory 95000 Add Purchases 40000 Less Cost of goods sold 12500080 100000 L... View the full answer