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8 August, 20:22

Harrison's Supply Co. suffered a fire loss on April 20, 2013. The company's last physical inventory was taken January 30, 2013, at which time the inventory totaled $220,000. Sales from January 30 to April 20 were $600,000 and purchases during that time were $450,000. Harrison's consistently reports a 30% gross profit. The estimated inventory loss is:a. $490,000. b. $238,000. c. $250,000. d. None of these

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  1. 8 August, 22:09
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    c. $250,000

    Explanation:

    The computation of the estimated inventory loss is shown below:

    = Total amount of inventory + purchase made during the year - costs of goods sold

    = $220,000 + 450,000 - $420,000

    = $670,000 - $420,000

    = $250,000

    The cost of goods would be

    = Sales - sales * gross profit margin

    = $600,000 - $600,000 * 30%

    = $600,000 - $180,000

    = $420,000
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