Question

Waterway Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. Corporate records disclose the following. Inventory (beginning) $ 79,400 Sales revenue $ 417,900 Purchases 288,900 Sales returns 20,900 Purchase returns 28,500 Gross profit % based on net selling price 33 % Merchandise with a selling price of $ 30,100 remained undamaged after the fire, and damaged merchandise has a net realizable value of $ 8,200. The company does not carry fire insurance on its inventory. Compute the amount of inventory fire loss. (Do not use the retail inventory method.) Inventory fire loss $

Answer 1

Answer:-

Warterway Company
Inventory fire loss
Particulars		Amount
		$
Beginning inventory		79400
Purchases		288900
		368300
Less:- Purchase Return		28500
Goods available (at cost)		339800
Sales Revenue	417900
Less:- Sales returns	20900
Net Sales	397000
Less:-Gross Profit ($397000*33%)	131010	265990
Estimated ending inventory (Unadjusted for damage)		73810
Less:- Goods on hand- undamaged (at cost)	30100*33%	9933
Less:- Goods on hand- damaged (at net realizable value)		8200
Fire loss on inventory		55677