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Question: A fire destroyed most of the inventory of a furniture store. Before the fire the records showed the following:
Sales to date of the fire $460,000
Sales returns 10,000
Beginning Inventory 75,000
Purchases 375,000
Freight In 1,000
Freight Out 3,000
Depreciation Expense 14,000
Purchases Discounts 2,000
Normal markup on Cost was 1/4 or 25%
Part A: If the markup on cost was 1/4, what was the Markup on Retail?
PART B: Using the gross profit method, what was the estimated cost of the ending inventory PRIOR to the fire?
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