ACCA F3 Incomplete

On 31 December 2014 the inventory of V was completely destroyed by fire. The following information is available.

1. Inventory at 1 December 2014 at cost $90,000

2. Purchases for December 2014 $17,120

3. Sales for December 2014 $25,680

4. Standard gross profit percentage on sales revenue 25%.

Based on this information, what is the amount of inventory destroyed?

Suggested solutions

COS = Sale X (1- gross profit margin)

COS = 25,680 X (1- 25 /100)

COS = 19,260

Inventory 1 December 2014 90,000
Add Purchase for December 2014 17,120
Less COS 19,260
= Inventory 31 December 2014 87,860

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