The Zeon Company had a flood on July 5, 2014, that destroyed all of its inventory. The salvaged accounting records contained the following information:
Sales, January 1 to July 5 ..........................................$ 737,650
Net merchandise purchased Jan. 1 to July 5 .....................414,900
Additional information was determined from the 2013 annual report:
Income statement:
Sales.....................................................................$2,122,550
Cost of goods sold ...................................................1,337,175
Balance sheet:
Merchandise inventory ............................................. 1 31,200
Zeon was unable to salvage any usable inventory after the water subsided.
Required:
Determine the amount of inventory lost by Zeon as a result of the flood. Zeon has a December 31 year-end, Round the gross profit ratio to the nearest whole percentage point.