The inventory of Columbo Company was destroyed by fire on April 1. From an examination of the accounting records, the following data for the first three months of the year are obtained: $$\begin{array} { l r }
\text { Sales Revenue } & \$ 185,000 \
\text { Sales Returns and Allowances } & 5,000 \
\text { Purchases } & 110,000 \
\text { Freight-In } & 3,500 \
\text { Purchase Returns and Allowances } & 4,000
\end{array}$$ Instructions
Determine the merchandise lost by fire, assuming a beginning inventory of $50,000 and a gross profit rate of 40% on net sales.

Question

The inventory of Columbo Company was destroyed by fire on April 1. From an examination of the accounting records, the following data for the first three months of the year are obtained: $$\begin{array} { l r } 
\text { Sales Revenue } & \$ 185,000 \
\text { Sales Returns and Allowances } & 5,000 \
\text { Purchases } & 110,000 \
\text { Freight-In } & 3,500 \
\text { Purchase Returns and Allowances } & 4,000
\end{array}$$ Instructions
Determine the merchandise lost by fire, assuming a beginning inventory of $50,000 and a gross profit rate of 40% on net sales.

Quizplus · Accepted Answer

The Answer of The inventory of Columbo Company was destroyed by fire on April 1. From an examination of the accounting records, the following data for the first three months of the year are obtained: $$\begin{array} { l r } 
\text { Sales Revenue } & \$ 185,000 \
\text { Sales Returns and Allowances } & 5,000 \
\text { Purchases } & 110,000 \
\text { Freight-In } & 3,500 \
\text { Purchase Returns and Allowances } & 4,000
\end{array}$$ Instructions
Determine the merchandise lost by fire, assuming a beginning inventory of $50,000 and a gross profit rate of 40% on net sales.

The Inventory of Columbo Company Was Destroyed by Fire on April