**Exercise 5-14A (Algo) Estimating ending inventory LO 5-4**A substantial portion of inventory owned by Prentiss Sporting Goods was recently destroyed when the roof collapsed during a rainstorm. Prentiss also lost some of its accounting records. Prentiss must estimate the loss from the storm for insurance reporting and financial statement purposes. Prentiss uses the periodic inventory system. The following accounting information was recovered from the damaged records.- **Beginning inventory**: $196,800- **Purchases to date of storm**: $403,000- **Sales to date of storm**: $608,700The value of undamaged inventory counted was $89,326. Historically, Prentiss' gross margin percentage has been approximately 18 percent of sales.**Required**Estimate the following:a. Gross margin in dollars.b. Cost of goods sold in dollars.c. Ending inventory.d. Amount of lost inventory.| a. Gross margin || b. Cost of goods sold || c. Estimated ending inventory || 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 the two companies is that Boardwalk Taffy uses FIFO, while Beach Sweets uses LIFO.| | Boardwalk Taffy | Beach Sweets ||----------------------|-----------------|---------------|| Cash | $ 75,000 | $ 75,000 || Accounts receivable | 350,000 | 350,000 || Merchandise inventory| 240,000 | 210,000 || Accounts payable | 220,000 | 220,000 || Cost of goods sold | 1,368,000 | 1,344,000 || Buildings | 350,000 | 350,000 || Sales | 1,800,000 | 1,800,000 |Requireda-1. Compute the gross margin percentage for each company.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.- **Required A1** - **Required A2**- **Required B1**- **Required B2****Required A1**Compute the gross margin percentage for each company. (Round your answers to 1 decimal place.)Gross Margin| Company | Gross Margin (%) ||-------------------|------------------|| Boardwalk Taffy | % || Beach Sweets | % |[Button: Required A2]

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Answered: A substantial portion of inventory…

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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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…
Brad Essary owned a small company that sold garden equipment. The equipment was expensive, and a perpetual system was maintained for control purposes. Even so, lost, damaged, and stolen merchandise normally amounted to 5 percent of the inventory balance. On June 14, Essary's warehouse was destroyed by fire. Just prior to the fire, the accounting records contained a $154,500 balance in the Inventory account. However, inventory costing $11,100 had been sold and delivered to customers but had not been recorded in the books at the time of the fire. The fire did not affect the showroom, which contained inventory that cost $41,200. Required Estimate the amount of inventory destroyed by fire. Inventory destroyed by fire
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.
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7. The inventory was destroyed by fire on December 31. The following data were obtained from the accounting records:
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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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