The merchandise inventory was destroyed by fire on October 11. The following data were obtained from the
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Jan. 1 Merchandise inventory $ 260,000
Jan. 1–Oct. 11 Purchases (net) 1,900,000
Sales (net) 3,200,000
Estimated gross profit rate 40%
a. Estimate the cost of the merchandise destroyed.
b. Briefly describe the situations in which the gross profit method is useful.
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Related Book For
Accounting
ISBN: 978-0324662962
23rd Edition
Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren
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