Compute the amount of the loss as a result of the fire, assuming that the corporation had no insurance coverage.

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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Pharoah 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
$183,500
Sales revenue
$683,600
Purchases for the year
358,400
Sales returns
22,800
Purchase returns
30,000
Rate of gross profit on net sales
30 %
Merchandise with a selling price of $23,100 remained undamaged after the fire. Damaged merchandise with an original selling price of
$15,000 had a net realizable value of $5,800.
Compute the amount of the loss as a result of the fire, assuming that the corporation had no insurance coverage.
Amount of the loss
$
Transcribed Image Text:Pharoah 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 $183,500 Sales revenue $683,600 Purchases for the year 358,400 Sales returns 22,800 Purchase returns 30,000 Rate of gross profit on net sales 30 % Merchandise with a selling price of $23,100 remained undamaged after the fire. Damaged merchandise with an original selling price of $15,000 had a net realizable value of $5,800. Compute the amount of the loss as a result of the fire, assuming that the corporation had no insurance coverage. Amount of the loss $
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