A fire destroyed a warehouse of the Goren Group, Inc., on May 4, 2016. Accounting records on that date indicatedthe following:Merchandise inventory, January 1, 2016Purchases to date$1,900,0005,800,000Freight-inSales to date400,0008,200,000The gross profit ratio has averaged 20% of sales for the past four years.Required:Use the gross profitcost of the inventory destroyed in the fire.hod to estimate

Gross Profit Method: Under this method, the beginning inventory is added to the net purchases…

Answered: A fire destroyed a warehouse of the…

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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Blue Corporation's April 30 inventory was destroyed by fire. January 1 inventory was $155,000, and purchases for January through April totaled $467,300. Sales revenue for the same period was $684,500. Blue's normal gross profit percentage is 25% on sales. Using the gross profit method, estimate Blue's April 30 inventory that was destroyed by fire. Estimated ending inventory destroyed in fire $
On September 22, 2018, a flood destroyed the entire merchandise inventory on hand in a warehouse owned by the Rocklin Sporting Goods Company. The following information is available from the records of the company's periodic inventory system: Inventory, Jamuary 1, 2018 Net purchases, January 1 through September 22 Net sales, January 1 through Septenber 22 Gross profit ratio $144, 000 374, 000 570, 000 30% Required: Complete the below table to estimate the cost of inventory destroyed in the flood using the gross profit method. Beginning inventory Plus: Net purchases Cost of goods available for sale Less: Cost of goods sold: Net sales Less: Estimated gross profit Estimated cost of goods sold Estimated cost of inventory destroyed
Assume that the following was extracted from Massy’s accounting information system foroperations at this outlet for the week, up to the time of the fire.Sales 830,000 Purchases 580,000 Sales Returns 42,000 Purchases Returns 56,000 Beginning Inventory 160,000 The company’s gross profit percent based on net selling price is 40%. Merchandise with aselling price of $60,000 remained undamaged after the fire. Some smoke damaged merchandisehad a residual value of $18,200. The company is in the process of estimating its fire loss on inventory using the gross profitmethod, for insurance purposes. Required:Prepare a detailed schedule to compute the estimated fire loss incurred on inventory.
Late on the night of August 30, 2021, an arsonist destroyed the FAITHFUL Inc's warehouse which was full of inventory. The accounting records were stored in another facility and not destroyed in the fire. The company is in the process of filing a claim with its insurance company for the inventory loss due to the fire. Beginning inventory P350,500 Purchases through August 30, 2021 470,250 Net sales revenue through August 30, 2021 745,200 The gross profit percent has historically been 40% of net sales revenue. Estimate the value of the inventory destroyed in the fire using the gross profit method.
A fire destroyed a warehouse of the Goren Group, Incorporated, on May 4, 2024. Accounting records on that date indicated the following: Merchandise inventory, January 1, 2024 Purchases to date Freight-in Sales to date $ 1,940,000 5,840,000 Estimated loss from fire 440,000 8,600,000 The gross profit ratio has averaged 20% of sales for the past four years. Required: Use the gross profit method to estimate the cost of the inventory destroyed in the fire.
On November 21, 2024, a fire at Hodge Company’s warehouse caused severe damage to its entire inventory of Product Tex. Hodge estimates that all usable damaged goods can be sold for $26,000. The following information was available from the records of Hodge’s periodic inventory system: Inventory, November 1, 2024 $ 170,000 Net purchases from November 1, to the date of the fire 154,000 Net sales from November 1, to the date of the fire 234,000 Based on recent history, Hodge’s gross profit ratio on Product Tex is 40% of net sales. Required: Calculate the estimated loss on the inventory from the fire, using the gross profit method.
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.
On June 30, 2021, a fire at Norjanna Company’s only warehouse caused severe damage to itsinventory. Based on recent history, Norjanna has a gross profit of 25% on cost. The followinginformation is available from the records for the six months ended June 30, 2021:Inventory – January 1 4,000,000Net purchases 18,000,000Net sales 20,000,000A physical inventory disclosed undamaged goods with selling price of P1,000,000. On June 30, 2021,unsold goods on consignment with selling price of P1,500,000 are in the hands of the consignee. Whatis the estimated cost of inventory destroyed by fire? Judy Company uses the retail inventory method to approximate its ending inventory. The followinginformation is available for the current year: Cost RetailBeginning inventory 650,000 1,200,000Purchases…
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.
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