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21 June, 15:52

On July 8, a fire destroyed the entire merchandise inventory on hand of Larrenaga Wholesale Corporation. The following information is available:Sales, January 1 through July 8 $700,000 Inventory, January 1 130,000 Purchases, January 1 through July 8 640,000 Gross profit ratio 30% What is the estimated inventory on July 8 immediately prior to the fire? a. $192,000. b. $490,000. c. $510,000. d. $280,000. e. None of the above.

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  1. 21 June, 16:02
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    estimated inventory on July 8 = $280000

    so correct option is d. $280,000

    Explanation:

    given data

    sale = $700,000

    Inventory = $130,000

    Purchase = $640,000

    to find out

    estimated inventory on July 8

    solution

    first we get here total available inventory for sales that is

    Total Available inventory for sales = Inventory + Purchase ... 1

    put here value

    Total Available inventory for sales = $130,000 + $640,000

    Total Available inventory for sales = $770,000

    so now we get Inventory sols that is

    Inventory = (Sales - 30% of sales) ... 2

    Inventory = $700000 - (0.30 * $700000)

    Inventory = $490,000

    so now we get here estimated inventory on July 8 that is express as

    estimated inventory = Total Available inventory for sales - Inventory ... 3

    estimated inventory = $770,000 - $490,000

    estimated inventory = $280000

    so correct option is d. $280,000
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