Question

Ace company's inventory was destroyed by fire. Their records show net sales of $90,000, beginning inventory of $20,000, net purchases of $75,000 and a gross profit rate of 30%. What is the estimated value of the ending inventory?

Answer 1

Answer:

$32,000

Explanation:

Gross profit = (sales - cost of sales)/sales

30% = ($90000-Cost of sale)/$90000

cost of sale = $63000

Closing inventory = (opening inventory + purchases) - cost of sale

closing inventory = (20000 + 75000) - 63000