On April 15 of the current year, a fire destroyed the entire uninsured inventory of a retail store. The following data are available:Sales, January 1 through April 15 $480,000Inventory, January 1 80,000Purchases, January 1 through April 15 400,000Markup on cost 25%The amount of the inventory loss is estimated to be:a. $96,000. b. $48,000. c. $120,000. d. $80,000.

Question

Business

Yusuf Sutton

12 December, 09:58

On April 15 of the current year, a fire destroyed the entire uninsured inventory of a retail store. The following data are available:Sales, January 1 through April 15 $480,000Inventory, January 1 80,000Purchases, January 1 through April 15 400,000Markup on cost 25%The amount of the inventory loss is estimated to be:a. $96,000. b. $48,000. c. $120,000. d. $80,000.

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Answers (1)

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Spud · Answer 1

The correct answer is C: 120,000

Explanation:

Giving the following information:

Sales, January 1 through April 15 $480,000

Inventory, January 1 80,000

Purchases, January 1 through April 15 400,000

Markup on cost 25%.

We need to find the difference between the cost of the lost inventory and what it will cost to purchase now.

Inventory = (Beginning inventory + purchase) * 0.25=

Inventory = 480,000 * 0.25 = 120,000