Financial Accounting: E6-18 Doc Gibbs Company (Inventory)

Financial Accounting

E6-18
Doc Gibbs Company reported the following information for November and December 2008.
November December
Cost of goods purchased 500,000 610,000
Inventory, beginning-of-month 100,000 120,000
Inventory, end-of-month 120,000 ????
Sales 800,000 1,000,000
Doc Gibbs’s ending inventory at December 31 was destroyed in a fire.

Instructions:
a. Compute the gross profit rate for November.
b. Using the gross profit rate for November, determine the estimated cost of inventory lost in the fire.
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