Exercise 5-14A (Algo) Estimating ending inventory LO 5-4A substantial portion of inventory owned by Prentiss Sporting Goods was recently destroyed when the roof collapsedduring a rainstorm. Prentiss also lost some of its accounting records. Prentiss must estimate the loss from the storm forInsurance reporting and financial statement purposes. Prentiss uses the periodic Inventory system. The followingaccounting information was recovered from the damaged records.Beginning inventoryPurchases to date of stormSales to date of stormThe value of undamaged Inventory counted was $89,326. Historically, Prentiss' gross margin percentage has beenapproximately 18 percent of sales.RequiredEstimate the following:a. Gross margin in dollars.b.Cost of goods sold in dollars.c. Ending Inventory.d. Amount of lost inventory.a. Gross marginb. Cost of goods soldEstimated endinginventory$196,800403,000600,700C.d. Inventory lost Problem 5-25A (Algo) Using ratios to make comparisons LO 5-5The following accounting information pertains to Boardwalk Taffy and Beach Sweets. The only difference between thetwo companies is that Boardwalk Taffy uses FIFO, while Beach Sweets uses LIFO.CashAccounts receivableMerchandise inventoryAccounts payableCost of goods soldBuildingSalesBoardwalkTaffy$ 70,000Boardwalk TaffyBeach Sweets$70,000350,000210,000220,0001,368,000 1,344,000350,000240,000220,000GrossMargin350,0001,800,000Required Required Required RequiredA1A2B1B2Requireda-1. Compute the gross margin percentage for each company.a-2. Identify the company that appears to be charging the higher prices in relation to its cost.b-1. For each company, compute the inventory turnover ratio and the average days to sell Inventory.b-2. Identify the company that appears to be incurring the higher financing cost.Complete this question by entering your answers in the tabs below.Beach SweetsCompute the gross margin percentage for each company. (Round your answers to 1decimal place.)350,0001,800,000%%< Required A1Required A2 >

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FINANCIAL ACCOUNTING

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Chapter1: Financial Statements And Business Decisions

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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
In 2022, Sargent Company experienced a major casualty loss. The roof of its warehouse collapsed in an ice storm and destroyed its entire inventory. The company began the year with inventory of $300. It made purchases of $5,640 but returned $80 worth of merchandise. Sales prior to the ice storm were $9,400. Sargent must use the gross profit method to determine inventory on hand on the date of the casualty. The following is an excerpt of its income statement for the last three years. 2019 2020 2021 Net Sales $5,000 $6,000 $9,000 Cost of Goods Sold 2,150 2,340 3,312 General and Administrative Expense 500 600 900 Depreciation Expense 125 200 325 Operating Income $2,225 $2,860 $4,463 Requirement. Assume that Sargent uses the most recent three years of net sales and cost of goods sold to determine its historical gross profit. What are estimated cost of goods sold, estimated gross profit, and estimated ending…
Muller Computers stores its inventory in a warehouse that burned to the ground in late November, 2018. Their sales office was at a different location. In order to file a claim with their insurance, the owners ask you to estimate the inventory that was in the warehouse. The following information is available: Beginning Inventory 375,000 Purchases through November 30 470,250 Net sales revenue through november 30 793,000 The company's gross profit has historically been 40% of net sales revenue. Estimate the value of the inventory destroyed in the fire using the gross profit method. a.$528,550 b.$388,450 c.$369,950 d.$410,000
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During the taking of its physical inventory on December 31, 20Y4, Barry's Bike Shop incorrectly counted its inventory as $225,870 instead of the correct amount of $179,251. The effect on the balance sheet and income statement would be a. assets overstated by $46,619; retained earnings understated by $46,619; and net income statement understated by $46,619 b. assets overstated by $46,619; retained earnings understated by $46,619; and no effect on the income statement c. assets, retained earnings, and net income all overstated by $46,619 d. assets and retained earnings overstated by $46,619; and net income understated by $46,619

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