E9.14B (L0 4) (Gross Profit Method) Wineview Company lost most of its inventory in a fire in December just before the yearend physical inventory was taken. The corporation’s books disclosed the following. Beginning inventory $210,000 Sales $970,000 Purchases for the year 805,000 Sales returns 71,000 Purchase returns 15,000 Rate of gross margin on net sales 20% Merchandise with a selling price of $51,000 remained undamaged after the fire. Damaged merchandise with an original selling price of $25,000 had a net realizable value of $2,500. Instructions Compute the amount of the loss as a result of the fire, assuming that the company had no insurance coverage.

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Q: SUTA/FUTA Earnings

A: 1.

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A:

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Q: None

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.