Question

Coastal Shores Inc. (CSI) was destroyed by Hurricane Fred on August 5, 2021. At January 1, CSI reported an inventory of $190,000. Sales from January 1, 2021, to August 5, 2021, totaled $500,000 and purchases totaled $215,000 during that time. CSI consistently marks up its products 65% over cost to arrive at a selling price. The estimated inventory loss due to Hurricane Fred would be:

Answer 1

$101969.7

Explanation:

Beginning inventory = $190,000

Total sales = $500,000

Purchases = $215,000

Goods available for sale = Beginning inventory + purchases = $(190,000 + 215,000) = $405,000

Cost of goods sold = 500,000 / (100 + markup) %

500,000 / 165% = 303030.30

Goods available for sale - Cost of goods sold =

$405,000 - $303030.30 = $101969.7