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    Merchandise Inventory: Calculating Total Inventory Destroyed in a Fire

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    A fire completely destroyed the entire inventory of Printing Delight Company on April 10, 2014. Fortunately, the books were not destroyed in the fire. The following information is taken from the books of Printing Delight Company for January 1 to April 10 of 2014.

    Beginning inventory on Jan. 1 $ 45,000
    Net purchases from 1/1 to 4/10 252,000
    Net sales from 1/1 to 4/10 378,000
    Normal gross profit percentage 37%

    Estimate the amount of merchandise destroyed in the fire using the gross profit method:

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    Solution Preview

    To determine the amount of merchandise destroyed we will use the following formula:

    Beginning inventory + Net ...

    Solution Summary

    The solution depends on the method used to determine the selling price of the goods.