Thursday, 7 May 2015

Smith Distributors, Inc., supplies ice cream shops with various toppings for making sundaes. On November 17, 2013, 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:

Smith Distributors, Inc., supplies ice cream shops with various toppings for making sundaes. On November 17, 2013, 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
Chocolate
Toppings
  Inventory, January 1, 2013 $ 10,000   $ 6,000   $ 2,000  
  Net purchases through Nov. 17   100,000     26,000     11,000  
  Net sales through Nov. 17   150,000     45,000     19,000  
  Historical gross profit ratio   35 %   40 %   40 %


Required:
1.
Calculate the estimated cost of each of the toppings lost in the fire.

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