Gross Profit Method Select Information for Neonplus Corp.'s Inventory Was Available as Follows

question 134

Essay

Gross profit method
Select information for Neonplus Corp.'s inventory was available as follows for calendar 2020:
Sales....................................................$540,000
Net purchases.......................................380,000
Begeinning irventory.............................75,000 Neonplus' gross profit on sales was 30% last year, its first year of operations. A fire on December 31, 2020, destroyed the entire inventory. Calculate the inventory lost in the fire.
Instructions
a) Calculate the estimated cost of the inventory.
b) Prepare entries at December 31, 2020 to close the sales and merchandise accounts.

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Definitions:

Long-term Investments

Assets held for an extended period with the intention of achieving capital gains, dividends, or interest income.

Classified Balance Sheet

A balance sheet that organizes assets and liabilities into subcategories for clarity.

Intangible Assets

Assets that cannot be physically touched or held, such as patents, trademarks, and goodwill.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against an asset since it was placed in service, reflecting its loss of value over time.