California Inc

question 109

Multiple Choice

California Inc. ,through no fault of its own,lost an entire plant due to an earthquake on May 1,2016.In preparing its insurance claim on the inventory loss,the company developed the following data: Inventory January 1,2016,$300,000;sales and purchases from January 1,2016,to May 1,2016,$1,300,000 and $875,000,respectively.California consistently reports a 40% gross profit.The estimated inventory on May 1,2016,is:

• A)$302,500.
• B)$360,000.
• C)$395,000.
• D)$455,000.

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Definitions:

Corporation

A legal entity, created by the state, whose assets and liabilities are separate from its owners.