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Estimate Inventory on Hand to Determine the Amount of Theft Loss

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An inventory taken the morning after a large theft discloses $55,000 of goods on hand as of March 12. The following additional data is available from the books:

Inventory on hand, March 1 $84,000
Purchases received, March 1-11 $70,000
Sales (goods delivered to customers) $104,000

Past records indicate that sales are made at 30% above cost.

INSTRUCTIONS:

Estimate the inventory of goods on hand at the close of business on March 11 by the gross profit method and determine the amount of the theft loss. Show appropriate titles for all amounts in your presentation.

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Solution Summary

The solution explains and calculates the amounts required to estimate the inventory before the theft loss, given the inventory before the theft, the value of the purchases received over the weeks before the theft, and the value of sales goods delivered to customers, as well as the fact that sales are made at 30% above cost.

Solution Preview

If inventory and purchases up to March 11 amount to $154,000 (84000 +70000), and sales were 104,000 including 30% profit, then inventory sold was $80,000 ...

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