On May 15, 2016 the Smoky Bear Company inventory storage facility was completely destroyed in a fire. Offsite accounting records reflect the normal gross profit rate is 40% of sales.
On May 15, 2016 the Smoky Bear Company inventory storage facility was completely destroyed in a fire.
Offsite accounting records reflect the normal gross profit rate is 40% of sales. Sales to the date of the fire were $1,650,000. The April 30, 2016 inventory value was $500,000. Two purchases were made during May, before the fire, for the values of $500,000 and $800,000. Using the Gross Profit Method determine the estimated inventory loss due to the fire.
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