The Inventory of Pedigo Company Was Destroyed by Fire on April

question 88

Essay

The inventory of Pedigo Company was destroyed by fire on April 1. From an examination of the accounting records, the following data for the first three months of the year are obtained: Instructions
Determine the merchandise lost by fire, assuming a beginning inventory of $60,000 and a gross profit rate of 40% on net sales.

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Definitions:

Goods Manufactured

Items that have been completed through the manufacturing process and are ready for sale.

Cost

The value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore.

Month

A unit of time, typically a portion of a year, based on the orbit of the moon around Earth, commonly comprising 28 to 31 days.

Raw Materials

The unprocessed natural materials or substances used in the initial stages of manufacturing to produce goods.