Question

just problem 6

Problem 51 Suzie's Gymnastic Supply Company had a flood. Her ending inventory last year was $400,000. Her average markup is 150% of the cost of an item. Her sales to the date of the flood were 600,000. She had purchased $300,000 in inventory prior to the flood. How much inventory did she lose? Show your calculations. Problem 6 Gracie's Gobbers, Inc. was robbed! She needs to file a claim for the loss with her insurance company. She knows that last year she ended the year with $475,000 in inventory and after going through her invoices she finds she had purchased $350,000 in inventory this year up to the date of the robbery. Her sales so far this year were $1,200,000. She estimates that her gross margin averages 45%. How much inventory did she lose in the robbery? Show your calculations

Answer 1

As per Book keeping loss from robbery are allowed as deductible expenses as per event occurred.

In this case as per his records and knowledge the closing inventory value in last year is $ 4,75,000, same will become opening inventory for the current year. During the year purchases for the value of $ 3,50,000.

Accordingly Total Inventory till date of event loss is calculated as follow:

Opening Inventory( Carried forward of Last year Inventory) : $ 4,75,000

Purchases during the current year: $ 3,50,000

Total Inventory : $ 8,25,000

Total Sales: $ 12,00,000

Gross Margin: 45 %

Calculate Value of Cost of Goods Sold (COGS) : Gross Margin= ( Total Sales- Cost of gods sold) / Total Sale

Accordingly by putting all value as given and mentioned above

45/100 =( $ 12,00,000- COGS) / $ 12,00,000

COGS = $ 6,60,000.

Accordingly,  Inventory robbed on date of event is $ 8,25,000 - $ 6,60,000 = $ 1,65,000

For brevity Cost of goods sold is used as COGS