Light Trading lost most of its inventory in a fire in December, 2023 just before the year-end physical inventory was taken. The company's books disclosed the following: Purchases P3,900,000 Sales 6,500,000 Purchase returns 300,000 Sales returns 240,000 Merchandise with selling price of P210,000 remain undamaged after the fire. Damaged merchandise with an original selling price of P150,000 had a net realizable value of P53,000. A partial comparative profit and loss for 2022 and 2021 also disclosed the following: 2022 2021 Sales P5,000,000 P5,600,000 Cost of goods sold: Inventory, Januar 1 P 945,000 P1,100,000 Purchase (net) 3,780,000 3,177,000 Inventory, December 31 (1,700,000) (945,000) Cost of goods sold P3,025,000 P3,332,000 Gross profit P1,975,000 P2,268,000 Assuming that Light Trading had no insurance coverage, what is the amount of loss as a result of the fire? a. P1,544,000 b. P1,365,000 c. P1,328,000 d. P1,281,000

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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Question

Light Trading lost most of its inventory in a fire in December, 2023 just before the year-end physical inventory was taken. The company's books disclosed the following:

Purchases P3,900,000

Sales 6,500,000

Purchase returns 300,000

Sales returns 240,000

Merchandise with selling price of P210,000 remain undamaged after the fire. Damaged merchandise with an original selling price of P150,000 had a net realizable value of P53,000.

A partial comparative profit and loss for 2022 and 2021 also disclosed the following:

2022 2021

Sales P5,000,000 P5,600,000

Cost of goods sold:

Inventory, Januar 1 P 945,000 P1,100,000

Purchase (net) 3,780,000 3,177,000

Inventory, December 31 (1,700,000) (945,000)

Cost of goods sold P3,025,000 P3,332,000

Gross profit P1,975,000 P2,268,000

Assuming that Light Trading had no insurance coverage, what is the amount of loss as a result of the fire?

a. P1,544,000

b. P1,365,000