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.