Shamrock Company lost most of its inventory in a fire in December just before the year-endphysical inventory was taken. The corporation's books disclosed the following.Beginning inventory$180,800Sales revenue$662,500Purchases for the year361,100Sales returns24,600Purchase returns27,100Rate of gross profit on net sales30 %Merchandise with a selling price of $20,000 remained undamaged after the fire. Damagedmerchandise with an original selling price of $15,500 had a net realizable value of $5,600.Compute the amount of the loss as a result of the fire, assuming that the corporation had noinsurance coverage.Amount of the loss $479,300

Amount of loss = Ending inventory - Undamaged inventory - Net realizable value of damaged…

Answered: Compute the amount of the loss as a…

Business

Accounting

Compute the amount of the loss as a result of the fire,

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Contingent Liabilities and Provisions

A contingent liability can be defined as a liability the occurrence of which is dependent upon the happening of an uncertain future event. It is generally recorded in the books only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly.

Question

Shamrock 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
$180,800
Sales revenue
$662,500
Purchases for the year
361,100
Sales returns
24,600
Purchase returns
27,100
Rate of gross profit on net sales
30 %
Merchandise with a selling price of $20,000 remained undamaged after the fire. Damaged
merchandise with an original selling price of $15,500 had a net realizable value of $5,600.
Compute the amount of the loss as a result of the fire, assuming that the corporation had no
insurance coverage.
Amount of the loss $
479,300

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