(Gross Profit Method) You are called by Tim Duncan of Spurs Co. on July 16 and asked to prepare a claim for insurance as a result of a theft that took place the night before. You suggest that an inventory be taken immediately. The following data are available. Inventory, July 1 :$ 38,000Purchases—goods placed in stock July 1–15: 85,000Sales revenue—goods delivered to customers (gross): 116,000Sales returns—goods returned to stock: 4,000 Your client reports that the goods on hand on July 16 cost $30,500, but you determine that this figure includes goods of $6,000 received on a consignment basis. Your past records show that sales are made at approximately 40% over cost. Duncan’s insurance covers only goods owned.InstructionsCompute the claim against the insurance company.
(Gross Profit Method) You are called by Tim Duncan of Spurs Co. on July 16 and asked to prepare a claim for insurance as a result of a theft that took place the night before. You suggest that an inventory be taken immediately. The following data are available.
Inventory, July 1 :$ 38,000
Purchases—goods placed in stock July 1–15: 85,000
Sales revenue—goods delivered to customers (gross): 116,000
Sales returns—goods returned to stock: 4,000
Your client reports that the goods on hand on July 16 cost $30,500, but you determine that this figure includes goods of $6,000 received on a consignment basis. Your past records show that sales are made at approximately 40% over cost. Duncan’s insurance covers only goods owned.
Instructions
Compute the claim against the insurance company.
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