On December 31, 2013 Trade Cards Ltd

Multiple Choice

On December 31, 2013 Trade Cards Ltd. completed a physical inventory count that reflected an inventory valuation of $25,000. Theft is suspected; therefore, a reliable estimate of what the inventory should be is needed. Relevant data are: Sales revenue, $400,000; Average gross margin rate on sales for the past three years was 30 percent; Beginning inventory $20,000, and purchases, $290,000. The estimated amount of the theft loss is:

A) $-0-
B) $5,000
C) $7,500
D) $17,500