Harrison's Supply Co. suffered a fire loss on April 20, 2013. The company's last physical inventory was taken January 30, 2013, at which time the inventory totaled $220,000. Sales from January 30 to April 20 were $600,000 and purchases during that time were $450,000. Harrison's consistently reports a 30% gross profit. The estimated inventory loss is:a. $490,000. b. $238,000. c. $250,000. d. None of these

Question

Business

Owen Pierce

15 August, 13:03

Harrison's Supply Co. suffered a fire loss on April 20, 2013. The company's last physical inventory was taken January 30, 2013, at which time the inventory totaled $220,000. Sales from January 30 to April 20 were $600,000 and purchases during that time were $450,000. Harrison's consistently reports a 30% gross profit. The estimated inventory loss is:a. $490,000. b. $238,000. c. $250,000. d. None of these

+3

Answers (1)

Know the Answer?

Eden Rojas · Answer 1

c. $250,000

Explanation:

The computation of the estimated inventory loss is shown below:

= Total amount of inventory + purchase made during the year - costs of goods sold

= $220,000 + 450,000 - $420,000

= $670,000 - $420,000

= $250,000

The cost of goods would be

= Sales - sales * gross profit margin

= $600,000 - $600,000 * 30%

= $600,000 - $180,000

= $420,000