Salvage Sales Ltd

Essay

Salvage Sales Ltd. suffered a loss of some inventory by fire on May 7. Cost of inventory on hand on January 1 was $100,000 and purchases between January 1 and May 7 amounted to $70,000 while freight-in and purchase returns, respectively, amounted to $6,000 and $4,000. Between January 1 and May 7 sales totalled $84,000. Goods which cost $24,500 were undamaged by the fire while the remainder of the inventory was destroyed. What was the approximate cost of the goods destroyed if: $\begin{array} { | l | l | } \hline \text { (a) Mark-up is } 25 \text { percent on cost? } & \$ \\\hline \text { (b) Mark-up is } 25 \text { percent on selling price? } & \$ \\\hline\end{array}$