9-9 B Coronado Corporation’s April 30 inventory was destroyed by fire. January 1 inventory was $155,900,...

9-9 B

Coronado Corporation’s April 30 inventory was destroyed by fire. January 1 inventory was $155,900, and purchases for January through April totaled $529,000. Sales revenue for the same period were $654,700. Coronado’s normal gross profit percentage is 30% on sales.

Using the gross profit method, estimate Coronado’s April 30 inventory that was destroyed by fire.

Estimated ending inventory destroyed in fire

Expert Solution

Estimated ending inventory destroyed in fire $226,610

Working:

Step-1:Calculate cost of goods sold

Sales Revenue	a	$ 6,54,700
Less:Gross profit	b=a*30%	$ 1,96,410
Cost of goods sold		$ 4,58,290

Step-2:Calculate cost of goods Avaialble for sale

Beginning Inventory		$ 1,55,900
Purchase - January through April		$ 5,29,000
cost of goods available for sale		$ 6,84,900

Step-3:Calculate estimated ending inventory destroyed by fire

Cost of goods available for sale		$ 6,84,900
Less:Cost of goods sold		$ 4,58,290

Ending Inventory destroyed by fire		$ 2,26,610

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