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On April 15, 2021, fire damaged the office and warehouse of Larkspur Corporation. The only accounting record saved was the general ledger, from which the balance sheet data below was prepared. LARKSPUR CORPORATION MARCH 31, 2021 Cash Accounts receivable Inventory, December 31, 2020 $19,400 36,420 78,600

On April 15, 2021, fire damaged the office and warehouse of Larkspur Corporation. The only accounting record saved was the general ledger, from which the balance sheet data below was prepared. LARKSPUR CORPORATION MARCH 31, 2021 Cash Accounts receivable Inventory, December 31, 2020 $19,400 36,420 78,600

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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On April 15, 2021, fire damaged the office and warehouse of Larkspur Corporation. The only accounting record saved was the general ledger, from which the balance sheet data below was prepared. Cash Accounts receivable Inventory, December 31, 2020 Land Buildings Accumulated depreciation LARKSPUR CORPORATION MARCH 31, 2021 Equipment Accounts payable Other accrued expenses Show Transcribed Text Common stock Retained earnings Sales revenue Purchases Miscellaneous expense 1. 2. $19,400 36,420 78,600 38,130 100.320 3,467 $40,103 24,969 5,871 105,900 52,420 128,050 The following data and information have been gathered. 52,420 28,556 $357,313 $357,313 Ć The fiscal year of the corporation ends on December 31. An examination of the April bank statement and canceled checks revealed that checks written during the period April 1-15 totaled $12,460: $6,186 paid to accounts payable as of March 31, $3,394 for April merchandise shipments, and $4,129 paid for other expenses. Deposits during the same period amounted to $12,742, which consisted of receipts on account from customers with the exception of a $997 refund from a vendor for merchandise returned in April.
Transcribed Image Text:On April 15, 2021, fire damaged the office and warehouse of Larkspur Corporation. The only accounting record saved was the general ledger, from which the balance sheet data below was prepared. Cash Accounts receivable Inventory, December 31, 2020 Land Buildings Accumulated depreciation LARKSPUR CORPORATION MARCH 31, 2021 Equipment Accounts payable Other accrued expenses Show Transcribed Text Common stock Retained earnings Sales revenue Purchases Miscellaneous expense 1. 2. $19,400 36,420 78,600 38,130 100.320 3,467 $40,103 24,969 5,871 105,900 52,420 128,050 The following data and information have been gathered. 52,420 28,556 $357,313 $357,313 Ć The fiscal year of the corporation ends on December 31. An examination of the April bank statement and canceled checks revealed that checks written during the period April 1-15 totaled $12,460: $6,186 paid to accounts payable as of March 31, $3,394 for April merchandise shipments, and $4,129 paid for other expenses. Deposits during the same period amounted to $12,742, which consisted of receipts on account from customers with the exception of a $997 refund from a vendor for merchandise returned in April.
3. 4. 5. Correspondence with suppliers revealed unrecorded obligations at April 15 of $14,396 for April merchandise shipments, including $2,194 for shipments in transit (f.o.b. destination) on that date. 6. Customers acknowledged indebtedness of $42,020 at April 15, 2021. It was also estimated that customers owed another $8,280 that will never be acknowledged or recovered. Of the acknowledged indebtedness, $642 will probably be uncollectible. The companies insuring the inventory agreed that the corporation's fire-loss claim should be based on the assumption that the overall gross profit rate for the past 2 years was in effect during the current year. The corporation's audited financial statements disclosed this information: Net sales Net purchases Beginning inventory Show Transcribed Text Ending inventory Year Ended December 31 Inventory fire loss 2020 $ $568,220 298,400 54,300 78,600 2019 $368,920 215,960 62,480 c Inventory with a cost of $6,700 was salvaged and sold for $3,710. The balance of the inventory was a total loss. 54,300 Compute the amount of inventory fire loss. (Round ratios for computational purposes to 2 decimal places, e.g 78.52% and final answer to O decimal places, e.g. 28,987.)
Transcribed Image Text:3. 4. 5. Correspondence with suppliers revealed unrecorded obligations at April 15 of $14,396 for April merchandise shipments, including $2,194 for shipments in transit (f.o.b. destination) on that date. 6. Customers acknowledged indebtedness of $42,020 at April 15, 2021. It was also estimated that customers owed another $8,280 that will never be acknowledged or recovered. Of the acknowledged indebtedness, $642 will probably be uncollectible. The companies insuring the inventory agreed that the corporation's fire-loss claim should be based on the assumption that the overall gross profit rate for the past 2 years was in effect during the current year. The corporation's audited financial statements disclosed this information: Net sales Net purchases Beginning inventory Show Transcribed Text Ending inventory Year Ended December 31 Inventory fire loss 2020 $ $568,220 298,400 54,300 78,600 2019 $368,920 215,960 62,480 c Inventory with a cost of $6,700 was salvaged and sold for $3,710. The balance of the inventory was a total loss. 54,300 Compute the amount of inventory fire loss. (Round ratios for computational purposes to 2 decimal places, e.g 78.52% and final answer to O decimal places, e.g. 28,987.)
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