Question

The inventory of Ipswich Company Ltd. was destroyed by fire on March 1. From an examination of the accounting records, the following data for the first 2 months of the year are obtained: Sales Revenue £51,000, Sales Returns and Allowances £1,000, Purchases £31,200, Freight-In £1,200, and Purchase Returns and Allowances £1,800. Instructions Determine the merchandise lost by fire, assuming:


(a) A beginning inventory of £20,000 and a gross profit rate of 40% on net sales.


(b) A beginning inventory of £30,000 and a gross profit rate of 32% on net sales.

Answer 1

Answer:

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