Late on the night of August 30, 2021, an arsonist destroyed the FAITHFULInc's warehouse which was full of inventory. The accounting records werestored in another facility and not destroyed in the fire. The company is in theprocess of filing a claim with its insurance company for the inventory loss dueto the fire.Beginning inventoryP350,500Purchases through August 30, 2021470,250Net sales revenue through August 30, 2021745,200The gross profit percent has historically been 40% of net sales revenue.Estimate the value of the inventory destroyed in the fire using the grossprofit method.

Gross profit = $745,200*40% Gross profit = $298,080

Answered: Late on the night of August 30, 2021,…

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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ASAP!! The merchandise inventory of Ayan & Co. was destroyed by fire on 4th May 2021. The following data were obtained from the accounting record: Opening Inventory 1,120,000 Purchases 1,056,000 Purchases Returned & Allowance 52,000 Sales 2,870,000 Sales Return & Allowance 8,000 Estimated Gross Profit Rate 41% Required Compute the estimated cost of merchandise inventory destroyed by fire
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Oriole Music Company sells three principal types of musical instruments, with varying percentages of gross profit on cost. Harps Violins Cellos Gross profit percentage 30% 35% 40% On May 9, 2020 a fire destroyed Oriole's office and the warehouse in which it stored the instruments. To file a report of loss for insurance purposes, the company must know what the inventories were immediately preceding the fire. Unfortunately Oriole Music Company did not maintain any perpetual inventory records. A general ledger was kept and computer records related to the ledger were backed up to the cloud nightly. You were able to ascertain the following from the general ledger. Harps Violins Cellos Inventory, Jan. 1, 2020 $164,000 $98,400 $123,000 Purchases to May 9, 2020 123,000 41,000 61,500 Sales Revenue to May 9, 2020 239,850 121,770 195,160 Submit your estimate of the inventory amounts immediately preceding the fire. Harps Violins Cellos Inventory %24
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In 2022, Sargent Company experienced a major casualty loss. The roof of its warehouse collapsed in an ice storm and destroyed its entire inventory. The company began the year with inventory of $300. It made purchases of $5,640 but returned $80 worth of merchandise. Sales prior to the ice storm were $9,400. Sargent must use the gross profit method to determine inventory on hand on the date of the casualty. The following is an excerpt of its income statement for the last three years. 2019 2020 2021 Net Sales $5,000 $6,000 $9,000 Cost of Goods Sold 2,150 2,340 3,312 General and Administrative Expense 500 600 900 Depreciation Expense 125 200 325 Operating Income $2,225 $2,860 $4,463 Requirement. Assume that Sargent uses the most recent three years of net sales and cost of goods sold to determine its historical gross profit. What are estimated cost of goods sold, estimated gross profit, and estimated ending…

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