Suppose an Indigo bookstore lost inventory in a fire To

#6652
Suppose an Indigo bookstore lost inventory in a fire. To file an insurance claim, Indigo must
estimate its inventory by the gross profit method. For the past two years, Indigo's gross profit
has averaged 40% of net sales. Indigo's inventory records reveal the following data:Inventory,
July 1, 2014 ..................................................................... $ 360,000Transactions during
JulyPurchases ...................................................................................... 628,000Purchase
discounts ........................................................................ 4,500Purchase returns
........................................................................... 9,000Sales revenue
................................................................................ 1,000,000Sales returns
.................................................................................. 170,000Requirements1. Estimate the cost
of the lost inventory using the gross profit method.2. Prepare the July 2014 income statement
through gross profit. Show the detailed computation of cost of goods sold in a separate
schedule.View Solution:
Suppose an Indigo bookstore lost inventory in a fire To

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