Estimating ending inventory by the gross profit method Deluxe Auto Parts holds inventory all over the world. Assume that the records for one auto part show the following:
|
Beginning inventory |
$ 220,000 |
|
Net purchases |
800,000 |
|
Net sales |
1,100,000 |
|
Gross profit rate |
45% |
Suppose this inventory, stored in the United States, was lost in a fire.
Requirement
1. Estimate the amount of the loss to Deluxe Auto Parts. Use the gross profit method.