Question: The total sales for CARM Company up to December 31, 2016 was $1,000,000. Purchases for the month was $900,000, and freight-in of $40,000. The cost

The total sales for CARM Company up to December 31, 2016 was $1,000,000.

Purchases for the month was $900,000, and freight-in of $40,000.

The cost of beginning inventory was $70,000.

The company typically earns a gross profit of 35 percent.

On the night of December 31st, a fire completely destroyed CARM’s inventory.

Required:

Show your working for each of the following:

a. Using the gross profit method, estimate the amount of ending inventory that was destroyed in the fire. (5 points)

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