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3 November, 03:52

On April 15 of the current year, a fire destroyed the entire uninsured inventory of a retail store. The following data are available:Sales, January 1 through April 15 $480,000Inventory, January 1 80,000Purchases, January 1 through April 15 400,000Markup on cost 25%The amount of the inventory loss is estimated to be:a. $96,000. b. $48,000. c. $120,000. d. $80,000.

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  1. 3 November, 04:10
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    The correct answer is C: 120,000

    Explanation:

    Giving the following information:

    Sales, January 1 through April 15 $480,000

    Inventory, January 1 80,000

    Purchases, January 1 through April 15 400,000

    Markup on cost 25%.

    We need to find the difference between the cost of the lost inventory and what it will cost to purchase now.

    Inventory = (Beginning inventory + purchase) * 0.25=

    Inventory = 480,000 * 0.25 = 120,000
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