Reference no: EM131810931

Question 1 - Gross Profit Method

A fire completely destroyed all the inventory of Glisan Lumber Yard on August 5, 20--. Fortunately, the accounting records were not destroyed in the fire. The following information is provided by Glisan Lumber Yard for the time period January 1 through August 5:

Beginning inventory, January 1, 20--$116,000

Net purchases, January 1 through August 5 432,000

Net sales, January 1 through August 5720,000

Normal gross profit as a percentage of sales 40%

Required: Estimate the amount of merchandise inventory destroyed in the fire on August 5 using the gross profit method.

Question 2 - Retail Inventory Method

The following information is provided by Raynette's Pharmacy for the last quarter of its fiscal year ending on March 31, 20:

Cost Retail Inventory, start of period, January 1, 20--$34,000  $51,100  Net purchases during the period180,668  269,300  Net sales for the period261,900 

Required:

1. Estimate the ending inventory as of March 31 using the retail inventory method.

2. Estimate the cost of goods sold for the time period January 1 through March 31 using the retail inventory method.