Hat's accounting records showed the following: Inventory, January 1 $35,000 Purchases, January 1... Question: Hat's accounting records showed the following:  Inventory, January 1$35,000 Purchases, January 1 through May 1 200,000 Sales, January 1 through May 1 250,000 Inventory not damaged by flood 30,000 Gross profit percentage on sales 40%

What amount of inventory was lost in the flood?

a. $55,000 b.$85,000

c. $150,000 d.$105,000

Cost of Goods Sold:

The cost of the goods sold is used to calculate the gross income. The formula of the gross can be the total net sales less total cost of goods sold. It Is also helps in calculate net income.

Particular Amount $Amount$
Beginning balance 35,000
Less: Ending Inventory
Inventory not damaged by flood 30,000
Inventory damaged by flood (balance) 55,000 85,000
Cost of Goods Sold (100%-40%) 150,000 (60% x 250,000)

Hence option A is correct.