1. The adjusted balance of the inventory account as of October 31, 2014?

2. The correct cost of sales for the period ended October 31, 2014?

1. Using the gross profit test, what was the estimated loss in inventory due to the fire assuming that the gross profit rate is 30% based on sales?

2. Using the gross profit test, what was the estimated loss in inventory due to the fire assuming that the gross profit rate is 25% based on cost?

Transcribed Image Text:

P235,000 2.543,900 P2,778,900 Inventory per count (354,500) Cost of Sales P 2,424,400 The following list of invoices is for purchase of merchandise and are entered in the purchase journal for the months of October and November 2014: 11201 11202 11203 11204 11205 11206 11207 Receiving Report No. 11208. 11209 Inventory, November 1,2013 11210 11211 11212 11213 11214 Receiving Report No. 11215 11216 Net Purchases, unadjusted Cost of Goods Available for sale Four Company Schedule of Cost of Sales For the period ended October 31,2014 Amount P14,400 8,800 18,500 7,800 5,000 20,500 18,400 24,200 69,200 Amount P4,000 9,700 12,840 14,440 25,640 28,400 14,200 OCTOBER Freight Terms Destination Destination Shipping Point Destination Destination Shipping Point Shipping Point Destination Destination NOVEMBER Freight Terms Destination Destination Shipping Point Shipping Point Shipping Point Shipping Point Destination Date of Invoice October 19 October 20 October 20 October 25 November 4 October 25 October 25 October 21 October 29 Date of Invoice October 29 October 30 October 27 November 2 October 23 October 23 October 27 Date Merchandise were Received October 21 October 22 October 20 November 3 October 29 October 30 October 30 October 30 October 30 Date Merchandise were Received October 31 October 30 October 30 November 3 November 3 November 3 November 3 L P235,000 2.543,900 P2,778,900 Inventory per count (354,500) Cost of Sales P 2,424,400 The following list of invoices is for purchase of merchandise and are entered in the purchase journal for the months of October and November 2014: 11201 11202 11203 11204 11205 11206 11207 Receiving Report No. 11208. 11209 Inventory, November 1,2013 11210 11211 11212 11213 11214 Receiving Report No. 11215 11216 Net Purchases, unadjusted Cost of Goods Available for sale Four Company Schedule of Cost of Sales For the period ended October 31,2014 Amount P14,400 8,800 18,500 7,800 5,000 20,500 18,400 24,200 69,200 Amount P4,000 9,700 12,840 14,440 25,640 28,400 14,200 OCTOBER Freight Terms Destination Destination Shipping Point Destination Destination Shipping Point Shipping Point Destination Destination NOVEMBER Freight Terms Destination Destination Shipping Point Shipping Point Shipping Point Shipping Point Destination Date of Invoice October 19 October 20 October 20 October 25 November 4 October 25 October 25 October 21 October 29 Date of Invoice October 29 October 30 October 27 November 2 October 23 October 23 October 27 Date Merchandise were Received October 21 October 22 October 20 November 3 October 29 October 30 October 30 October 30 October 30 Date Merchandise were Received October 31 October 30 October 30 November 3 November 3 November 3 November 3 L

Answer rating: 100% (QA)

To determine the estimated loss in inventory due to the fire using the gross profit test we need to calculate the cost of goods sold and then estimate the inventory loss based on the given gross profi... View the full answer