A fire completely destroyed all the inventory of Glisan Lumber Yard on August 5, 20- -. Fortunately, the accounting records were not destroyed in the fire. The following information is provided by Glisan Lumber Yard for the time period January 1 through August 5: Beginning inventory, January 1, 20- $94,000 Net purchases, January 1 through August 5 407,000 Net sales, January 1 through August 5 733,000 Normal gross profit as a percentage of sales 40% Required: Estimate the amount of merchandise inventory destroyed in the fire on August 5 using the gross profit method.

A fire completely destroyed all the inventory of Glisan Lumber Yard on August 5, 20- -. Fortunately, the accounting records were not destroyed in the fire. The following information is provided by Glisan Lumber Yard for the time period January 1 through August 5: Beginning inventory, January 1, 20- $94,000 Net purchases, January 1 through August 5 407,000 Net sales, January 1 through August 5 733,000 Normal gross profit as a percentage of sales 40% Required: Estimate the amount of merchandise inventory destroyed in the fire on August 5 using the gross profit method.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Blossom Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. The corporation's books disclosed the following. Beginning inventory Purchases for the year Purchase returns $168,500 Amount of the loss 412,700 30,100 Sales revenue Sales returns Rate of gross profit on net sales $628,200 25,600 20 % Merchandise with a selling price of $20,300 remained undamaged after the fire. Damaged merchandise with an original selling price of $15,200 had a net realizable value of $5,200. Compute the amount of the loss as a result of the fire, assuming that the corporation had no insurance coverage.
A flood destroyed Toshiaki Company's warehouse and all of its inventory. Toshiaki will use the gross profit method to determine its inventory in the warehouse at the time. Toshiaki's management believes that the average of the last two years' gross profit percentage is a good estimate of the gross profit in the current year. Sales last year were $7,700 and $6,100 in the year before. Its cost of goods sold was $4,466 last year and $3,782 the year before. Toshiaki's prior-year balance sheet reported inventory of $450. Before the flood, net sales were $5,200. Toshiaki purchased $3,900 of inventory. Read the requirements. Requirement a. Use the gross profit method to determine Toshiaki's historical gross profit percentage. Identify the appropriate formula and then calculate Toshiaki's historical gross profit percentage for each year. (Round the gross profit percentage to one decimal place, X.X%.) Gross profit % Two Year's Prior % Prior Year % Requirements Round percentages to one decimal…
Sandhill Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $ 37,240. Purchases since January 1 were $ 70,560; freight-in, $ 3,332; purchase returns and allowances, $ 2,352. Sales are made at 33 1/3% above cost and totaled $ 111,000 to March 9. Goods costing $ 10,682 were left undamaged by the fire; remaining goods were destroyed.
On January 1, a store had inventory of $48,000. January purchases were $46,000 and January sales were $95,000. On February 1 a fire destroyed most of the inventory. The rate of gross profit was 20% of sales. Merchandise with a selling price of $5,000 remained undamaged after the fire. Compute the amount of the fire loss, assuming the store had no insurance coverage. Label all figures.
7. The inventory was destroyed by fire on December 31. The following data were obtained from the accounting records: