On March 15, Stark Company's inventory was destroyed by a tornadoInventory, January 1Purchases to Mar 15Sales to Mar 15Sales returns to Mar 15: $7,000Stark's average gross profit ratio is 35%. What is the estimated value of the destroyed inventory?

Question

Quizplus · Accepted Answer

The estimated value of the destroyed inventory is $7,300. This is calculated by dividing the sales returns by the gross profit ratio. In this case, the sales returns are $7,000 and the gross profit ratio is 35%. Therefore, the estimated value of the destroyed inventory is $7,000 / 0.35 = $7,300.

On March 15, Stark Company's Inventory Was Destroyed by a TornadoInventory