A company's store was destroyed by a fire on February 10 of the current year. The only information for the current period that could be salvaged included the following: Beginning inventory. January 1: $34,000 Purchases to date. $118,000 Sales to date; $ 140,000 Historically, the company's gross profit ratio has been 30%. Estimate the value of the destroyed inventory using the gross profit method.

Deducting the cost of goods that have been sold from the cost of goods that are still in stock, one can compute the amount of inventory that has been destroyed.

What is the value of inventory destroyed by fire?

All the items, materials, and products that a business has on hand and intends to sell to clients for a profit are collectively referred to as inventory. If the vendor uses a vehicle to deliver newspapers to customers, the newspaper will be the only thing that counts as inventory. We'll treat the car like a valuable possession.

After that, deduct the price of the products that are still up for sale from the price of the already sold items. How much inventory was destroyed by the fire will be shown in the total.

Multiplying the period's sales by (1 - anticipated gross profit%) will yield the estimated cost of goods sold. The estimated cost of goods sold is determined in step two. Determine the price of the goods that are for sale in step one.

Therefore, the correct answer is $54,000.

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