Question 1: A company's warehouse was destroyed by a tornado on March 15. The following information was the only information that was salvaged:
1. Inventory, beginning: $28,000
2. Purchases for the period: $17,000
3. Sales for the period: $55,000
4. Sales returns for period: $700
The company's average gross profit ratio is 35%. What is the estimated cost of the lost inventory?
Question 2: MMM Store uses the periodic inventory system and had the following transactions during the month of May:
May 3 Sold merchandisce toa customer on credit for $600, terms 2/10,n/30. The cost of the muerchandise sold was $350.
May 4 Sold merchandise to a customer for cashof $425. The cost of the merchandise was $250.
May 6 Sold merchansice to a customer on credit for $1,300, terms 2/10, n/30. The cost of the merchandise sold was $750.
May 8 The customer from May 3 returned merchanside with a selling prince of $100. The cost of the merchandise returned was $55
May 15 The customer from May 6 paid the full amount due, less any appropriate discounts earned.
May 31 The customer from May 3 paid the full amount due, less any appropriate discournts earned.
Prepare the required journal entries that MMM Store must make to record these transactions.