Gross profit method.
On December 31, 2014 Felt Company's inventory burned. Sales and purchases for the year had been $1,500,000 and $980,000, respectively. The beginning inventory (Jan. 1, 2014) was $170,000; in the past Felt's gross profit has averaged 40% of selling price.

Instructions
Compute the estimated cost of inventory burned, and give entries as of December 31, 2014 to close merchandise accounts.

Question

Gross profit method.
On December 31, 2014 Felt Company's inventory burned. Sales and purchases for the year had been $1,500,000 and $980,000, respectively. The beginning inventory (Jan. 1, 2014) was $170,000; in the past Felt's gross profit has averaged 40% of selling price.

Instructions
Compute the estimated cost of inventory burned, and give entries as of December 31, 2014 to close merchandise accounts.

Quizplus · Accepted Answer

The Answer of Gross profit method.
On December 31, 2014 Felt Company's inventory burned. Sales and purchases for the year had been $1,500,000 and $980,000, respectively. The beginning inventory (Jan. 1, 2014) was $170,000; in the past Felt's gross profit has averaged 40% of selling price.

Instructions
Compute the estimated cost of inventory burned, and give entries as of December 31, 2014 to close merchandise accounts.

Gross Profit Method. on December 31, 2014 Felt Company's Inventory Burned. Sales and Burned