Question

Viewpoint Company’s October 31 inventory was destroyed by fire. The company’s beginning inventory was $500,000, and purchases for January through October were $1,200,000. Sales for the same period were $1,800,000. The company’s normal gross profit percentage is 30% of sales. Using the gross profit method, the October 31 inventory is estimated to be $300,000. $40,000. $540,000. $440,000.

Answer 1

$440,000

Explanation:

Sales : $1,800,000

Gross profit : (30% × 1,800,000) : $540,000

Cost of goods sold (Sales-profit) : $1260,000

Beginning inventory : $500,000

Purchasing : $1,200,000

Total : $1,700,000

Goods sold (subtract) : $1,260,000

Closing inventory : $440,000