On July 5, 2021, a fire destroyed the entire inventory of Islamorada Art Warehouse. The...
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Accounting
On July 5, 2021, a fire destroyed the entire inventory of Islamorada Art Warehouse. The following information is available from its accounting records, from January 1, through the date of the fire:
| Inventory, January 1, 2021 | $253,200 |
| Purchases | 630,000 |
| Purchase returns | 50,000 |
| Freight-in | 20,000 |
| Sales | 1,140,000 |
| Sales returns | 60,000 |
| Normal gross margin | 40% |
Instructions
Compute the estimated cost of the inventory lost in the fire using the gross profit method.
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