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Compute the amount of inventory fire loss. (R Inventory fire loss

Compute the amount of inventory fire loss. (R Inventory fire loss

FINANCIAL ACCOUNTING
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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Problem 9-7 On April 15, 2018, fire damaged the office and warehouse of Stanislaw Corporation. The only accounting record saved was the general ledger, from which the balance sheet data below was prepared. Cash Accounts receivable Inventory, December 31, 2017 Land Buildings Accumulated depreciation Equipment Accounts payable Other accrued expenses Common stock Retained earnings Sales revenue Purchases Miscellaneous expense STANISLAW CORPORATION MARCH 31, 2018 Net sales Net purchases $20,000 40,000 75,000 35,000 110,000 Beginning inventory Ending inventory 3,600 52,000 26,600 $362,200 The following data and information have been gathered. 1. The fiscal year of the corporation ends on December 31. 2. An examination of the April bank statement and canceled checks revealed that checks written during the period April 1-15 totaled $13,000: $5,700 paid to accounts payable as of March 31, $3,400 for April merchandise shipments, and $3,900 paid for other expenses. Deposits during the same period amounted to $12,950, which consisted of receipts on account from customers with the exception of a $950 refund from a vendor for merchandise returned in April. 3. Correspondence with suppliers revealed unrecorded obligations at April 15 of $15,600 for April merchandise shipments, including $2,300 for shipments in transit (f.o.b. shipping point) on that date. 4. Customers acknowledged indebtedness of $46,000 at April 15, 2018. It was also estimated that customers owed another $8,000 that will never be acknowledged or recovered. Of the acknowledged indebtedness, $600 will probably be uncollectible. $41,300 5. The companies insuring the inventory agreed that the corporation's fire-loss claim should be based on the assumption that the overall gross profit rate for the past 2 years was in effect during the current year. The corporation's audited financial statements disclosed this information: 2017 23,700 10,200 100,000 52,000 135,000 $362,200 $530,000 280,000 50,000 75,000 Year Ended December 31 2016 $390,000 235,000 66,000 50,000 6. Inventory with a cost of $7,000 was salvaged and sold for $3,500. The balance of the inventory was a total loss. Compute the amount of inventory fire loss. (Round ratios for computational purposes to 2 decimal places, e.g 78.52% and final answer to 0 decimal places, e.g. 28,987.) Inventory fire loss $
Transcribed Image Text:Problem 9-7 On April 15, 2018, fire damaged the office and warehouse of Stanislaw Corporation. The only accounting record saved was the general ledger, from which the balance sheet data below was prepared. Cash Accounts receivable Inventory, December 31, 2017 Land Buildings Accumulated depreciation Equipment Accounts payable Other accrued expenses Common stock Retained earnings Sales revenue Purchases Miscellaneous expense STANISLAW CORPORATION MARCH 31, 2018 Net sales Net purchases $20,000 40,000 75,000 35,000 110,000 Beginning inventory Ending inventory 3,600 52,000 26,600 $362,200 The following data and information have been gathered. 1. The fiscal year of the corporation ends on December 31. 2. An examination of the April bank statement and canceled checks revealed that checks written during the period April 1-15 totaled $13,000: $5,700 paid to accounts payable as of March 31, $3,400 for April merchandise shipments, and $3,900 paid for other expenses. Deposits during the same period amounted to $12,950, which consisted of receipts on account from customers with the exception of a $950 refund from a vendor for merchandise returned in April. 3. Correspondence with suppliers revealed unrecorded obligations at April 15 of $15,600 for April merchandise shipments, including $2,300 for shipments in transit (f.o.b. shipping point) on that date. 4. Customers acknowledged indebtedness of $46,000 at April 15, 2018. It was also estimated that customers owed another $8,000 that will never be acknowledged or recovered. Of the acknowledged indebtedness, $600 will probably be uncollectible. $41,300 5. The companies insuring the inventory agreed that the corporation's fire-loss claim should be based on the assumption that the overall gross profit rate for the past 2 years was in effect during the current year. The corporation's audited financial statements disclosed this information: 2017 23,700 10,200 100,000 52,000 135,000 $362,200 $530,000 280,000 50,000 75,000 Year Ended December 31 2016 $390,000 235,000 66,000 50,000 6. Inventory with a cost of $7,000 was salvaged and sold for $3,500. The balance of the inventory was a total loss. Compute the amount of inventory fire loss. (Round ratios for computational purposes to 2 decimal places, e.g 78.52% and final answer to 0 decimal places, e.g. 28,987.) Inventory fire loss $
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