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Western Company recently lost its entire inventory in an earthquake. The following information is available from its accounting records: Beginning Inventory: $5,000; Purchases: $18,000; Net

Western Company recently lost its entire inventory in an earthquake. The following information is available from its accounting records: 


Beginning Inventory: $5,000; Purchases: $18,000; Net Sales: $40,000;The company’s average gross profit percentage is 40%.


Using the gross profit method, a reasonable estimate of COGS for the past period would be:


1) $ 23,000


2) $ 24,000


3) $ 16,000


4) $ 18,000

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