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Gross Profit Method: Estimation of Flood Loss On June 30, 2019, a flash flood damaged the warehouse and factory of Padway Corporation, completely destroying the work-in-process inventory. There was no damage to either the raw materials or finished goods inventories. A physical inventory taken after the flood revealed the following valuations: Raw materials Work in process Finished goods $67,000 0 117,000 The inventory on January 1, 2019, consisted of the following: Raw materials $30,000 Work in process 100,000 Finished goods 150,000 $280,000 I A review of the books and records disclosed that the gross profit margin historically approximated 25% of sales. The sales for the first six months of 2019 were $340,000. Raw material purchases were $115,000. Direct labor costs for this period were $60.000, and manufacturing overhead was historically applied at 50% of direct labor. Required: Compute the value of the work-in-process inventory lost at June 10, 2019.

Gross Profit Method: Estimation of Flood Loss On June 30, 2019, a flash flood damaged the warehouse and factory of Padway Corporation, completely destroying the work-in-process inventory. There was no damage to either the raw materials or finished goods inventories. A physical inventory taken after the flood revealed the following valuations: Raw materials Work in process Finished goods $67,000 0 117,000 The inventory on January 1, 2019, consisted of the following: Raw materials $30,000 Work in process 100,000 Finished goods 150,000 $280,000 I A review of the books and records disclosed that the gross profit margin historically approximated 25% of sales. The sales for the first six months of 2019 were $340,000. Raw material purchases were $115,000. Direct labor costs for this period were $60.000, and manufacturing overhead was historically applied at 50% of direct labor. Required: Compute the value of the work-in-process inventory lost at June 10, 2019.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Gross Profit Method: Estimation of Flood Loss On June 30, 2019, a flash flood damaged the warehouse and factory of Padway Corporation, completely destroying the work-in-process inventory. There was no damage to either the raw materials or finished goods inventories. A physical inventory taken after the flood revealed the following valuations: Raw materials Work in process Finished goods $67,000 0 117,000 The inventory on January 1, 2019, consisted of the following: Raw materials $30,000 Work in process 100,000 Finished goods 150,000 $280,000 I A review of the books and records disclosed that the gross profit margin historically approximated 25% of sales, The sales for the first six months of 2019 were $340,000. Raw material purchases were $115,000. Direct labor costs for this period were $60.000, and manufacturing, overhead was historically applied at 50% of direct labor. Required: Compute the value of the work-in-process inventory lost, at June 30, 2019
Transcribed Image Text:Gross Profit Method: Estimation of Flood Loss On June 30, 2019, a flash flood damaged the warehouse and factory of Padway Corporation, completely destroying the work-in-process inventory. There was no damage to either the raw materials or finished goods inventories. A physical inventory taken after the flood revealed the following valuations: Raw materials Work in process Finished goods $67,000 0 117,000 The inventory on January 1, 2019, consisted of the following: Raw materials $30,000 Work in process 100,000 Finished goods 150,000 $280,000 I A review of the books and records disclosed that the gross profit margin historically approximated 25% of sales, The sales for the first six months of 2019 were $340,000. Raw material purchases were $115,000. Direct labor costs for this period were $60.000, and manufacturing, overhead was historically applied at 50% of direct labor. Required: Compute the value of the work-in-process inventory lost, at June 30, 2019
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