Collins Computers Stored Its Inventory in a Warehouse Which Suffered

question 97

Multiple Choice

Collins Computers stored its inventory in a warehouse which suffered a fire in late November, 2014. Their sales office was at a different location. In order to file a claim with the insurance company, the owners ask you to estimate the inventory in the warehouse. The following information is available: $$\begin{array} { | l | r | } \hline \text { Beginning inventory for November } & \$ 375,500 \\\hline \text { Purchases through November } 30 & 470,250 \\\hline \text { Net sales revenue through November } 31 & 793,000 \\\hline\end{array}$$ The company's gross profit has historically been 40% of Net sales revenue. Estimate the value of the inventory destroyed in the fire using the gross profit method.

• A) $369,950
• B) $528,550
• C) $410,000
• D) $388,450