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The merchandise inventory was destroyed by fire on Aug. 19. The following is the data:

Jan 1 Merchandise inventory $360,000
1/1 - 8/19 Purchases (net) 3,200,000
sales (net) 5,200,000
Estimated gross profit rate 35%

a. Estimate the cost of the merchandise destroyed.

b Briefly describe the situations in which the gross profit method is useful.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M946240

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