Problem 9-5 (Algo) Gross profit method [LO9-2]
Southern Distributors, Incorporated, supplies ice cream shops with various toppings for making sundaes. On November 17, 2024, a fire
resulted in the loss of all of the toppings stored in one section of the warehouse. The company must provide its insurance company
with an estimate of the amount of inventory lost. The following information is available from the company's accounting records:
Fruit
Toppings
Marshmallow
Toppings
Inventory, January 1, 2024
Net purchases through November 17
Net sales through November 17
Historical gross profit ratio
$ 17,000
135,000
185,000
25%
$ 6,700
33,000
52,000
35%
Chocolate
Toppings
$ 2,700
11,700
19,700
35%
Required:
1. Calculate the estimated cost of each of the toppings lost in the fire.
Toppings
Fruit
Marshmallow
Chocolate
Estimated cost of lost
inventory