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Calculate the estimated cost of inventory destroyed in fire

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Reference no: EM132940057

Select information for Rays Corp.'s inventory was available as follows for calendar 2020:

Sales............................................... $540,000

Net purchases................................. 380,000

Beginning inventory....................... 75,000

Rays' gross profit on sales was 30% last year, its first year of operations. A fire on December 31, 2020, destroyed the entire inventory.

Instructions

Problem 1: Using the gross profit method, calculate the estimated cost of the inventory destroyed in the fire.

Problem 2: Prepare entries on December 31, 2020, to close the inventory accounts.

Reference no: EM132940057

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