Riverbottom Liquidators Was Wiped Out by a Recent Flood When

question 43

Multiple Choice

Riverbottom Liquidators was wiped out by a recent flood when all its inventory was observed floating down the river.On the day after the flood,management filed an insurance claim on the inventory that was totally destroyed.From records maintained elsewhere it was established:
Sales revenue (to date this period) $700 000
Beginning inventory $ 90 000
Purchases (so far this period) $600 000
Historical gross profit percentage 60%
Assuming the historical gross profit was maintained during the current period what was the cost of inventory lost in the flood?

• A)$690 000
• B)$410 000
• C)$280 000
• D)$270 000

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Definitions:

Rubric

A set of guidelines or criteria used to evaluate or score performance, products, or responses in a consistent and standardized manner.

Critical Thinking

The intellectual discipline of actively and skillfully conceptualizing, applying, analyzing, synthesizing, and/or evaluating information gathered from, or generated by, observation, experience, reflection, reasoning, or communication.

Analytical

Pertaining to the systematic examination and evaluation of data or information, often by breaking it into its component parts to uncover their interrelationships.

Destructive

Causing great and irreparable harm or damage.