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*P6-10A Saffordville Company lost 70% of its inventory in a fire on March 25, 2008. The accounting records showed the following gross profit data for February and March.
March
February (to 3/25)
Net sales $300,000 $250,000
Net purchases 197,800 191,000
Freight-in 2,900 4,000
Beginning inventory 4,500 13,200
Ending inventory 13,200 ?
Saffordville Company is fully insured for fire losses but must prepare a report for the insurance company.
Instructions
(a) Compute the gross profit rate for the month of February.
(b) Using the gross profit rate for February, determine both the estimated total inventory and inventory lost in the fire in March.
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