The inventory was destroyed by fire on December 31. The following data were obtained from the accounting records: Jan. 1 Inventory $ 360,000 Jan. 1 to Dec. 31 Purchases (net) 2,870,000 Sales 4,470,000 Estimated gross profit rate 30% A. Estimate the cost of the inventory destroyed. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. B. In which situations would the gross profit method be useful

A. Estimate the cost of the inventory destroyed is $101,000

B. Gross profit method would be useful in estimating the cost of merchandise destroyed by the fire.

Explanation:

Particulars                                                                Debit ($)                Credit ($)

Beginning merchandise inventory                                                     360,000

Add: Net purchase                                                                              2,870,000

Merchandise available for sale                                                          3,230,000

Less: Net sales                                                      4,470,000

Estimated gross profit (30%)                                (1,341,000)

Estimated cost of merchandise sold                                                  3,129,000

Estimate the cost of the inventory destroyed                                    101,000

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.

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