A fire on 30 September 20X4 destroyed some of a company’s inventory and its inventory records.
The following information is available:
| $ | |
| Inventory 1 September 20X4 | 79,500 |
| Sales for September 20X4 | 153,000 |
| Purchases for September 20X4 | 103,000 |
| Inventory in good condition at 30 September 20X4 | 53,500 |
Standard gross profit percentage on sales is 35%
Based on this information, what is the value of the inventory lost?
Answer
Margin = (sale –cost)/sale = 35% ,so cost = sale x 65%
| $ | |
| Opening inventory | 79,500 |
| Purchases | 103,000 |
| Closing inventory | (53,500) |
| Cost of sale | 129,000 |
| Notional cost of sales (153,000 x 65%) | (99,450) |
| Inventory lost | 29,550 |