Assume that the following was extracted from Massy’s accounting information system for operations 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 a selling price of $60,000 remained undamaged after the fire. Some smoke damaged merchandise had a residual value of $18,200. The company is in the process of estimating its fire loss on inventory using the gross profit method, for insurance purposes. Required: Prepare a detailed schedule to compute the estimated fire loss incurred on inventory.
Assume that the following was extracted from Massy’s
operations 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 a
selling price of $60,000 remained undamaged after the fire. Some smoke damaged merchandise
had a residual value of $18,200.
The company is in the process of estimating its fire loss on inventory using the gross profit
method, for insurance purposes.
Required:
Prepare a detailed schedule to compute the estimated fire loss incurred on inventory.
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