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30 May, 16:02

Fosbre Corporation's April 30 inventory was destroyed by fire. January 1 inventory was $156,000, and purchases for January through April totaled $468,200. Sales revenue for the same period were $718,800. Fosbre's normal gross profit percentage is 35% on sales. Using the gross profit method, estimate Fosbre's April 30 inventory that was destroyed by fire.

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  1. 30 May, 16:15
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    Total inventory lost = $156,980

    Explanation:

    Giving the following information:

    January 1 inventory was $156,000, and purchases for January through April totaled $468,200. Sales revenue for the same period was $718,800. Fosbre's normal gross profit percentage is 35% on sales.

    COGS=718,800*0.65 = 467,220

    Total inventory for sale = 156,000 + 468,200 = 624,200

    Total inventory lost = 624,200 - 467,220 = 156,980
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