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Problem - Leon Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $34,800. Purchases since January 1 were $75,700; freight-in, $3,600; purchase returns and allowances, $2,400. Sales are made at 33 1/3% above cost and totaled $100,100 to March 9. Goods costing $9,800 were left undamaged by the fire; remaining goods were destroyed.
1. Compute the cost of goods destroyed.
2. Compute the cost of goods destroyed, assuming that the gross profit is 33(1/3)% of sales.
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