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Windy City Insurance Ltd. has received a fire-loss claim of $45,000 from Balton Corp. A fire destroyed Balton’s inventory on May 25, 2016. Balton has an average gross profit of 33 1/3 per cent. You have obtained the following information:
|
Inventory, May 1, 2016 |
$ 80,000 |
|
Purchases, May 1 – May 25 |
150,000 |
|
Sales, May 1 – May 25 |
300,000 |
Required:
- Calculate the estimated amount of inventory lost in the fire.
- How reasonable is Balton’s claim?
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