On December 10, 2021, a fire at Rosa Company's warehouse caused severe damage to its entire inventory of Product Zeta. Rosa estimates that all usable damaged goods can be sold for $25,000. The following information was available from the records of Rosa's periodic inventory system: Inventory, December 1 $150,000 Net purchases from December 1, to the date of the fire $142,000 Net sales from December 1, to the date of the fire $210,000 Based on recent history, Rosa's gross profit ratio on Product Zeta is 35% of net sales. Required: Calculate the estimated loss on the inventory from the fire, using the gross profit method.

On December 10, 2021, a fire at Rosa Company's warehouse caused severe damage to its entire inventory of Product Zeta. Rosa estimates that all usable damaged goods can be sold for $25,000. The following information was available from the records of Rosa's periodic inventory system: Inventory, December 1 $150,000 Net purchases from December 1, to the date of the fire $142,000 Net sales from December 1, to the date of the fire $210,000 Based on recent history, Rosa's gross profit ratio on Product Zeta is 35% of net sales. Required: Calculate the estimated loss on the inventory from the fire, using the gross profit method.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter7: Inventories: Cost Measurement And Flow Assumptions

Section: Chapter Questions

Problem 7MC: Questions M7-6 and M7-7 are based on the following data: City Stationers Inc. had 200 calculators on...

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Questions M7-6 and M7-7 are based on the following data: City Stationers Inc. had 200 calculators on hand on January 1, 2019, costing 18 each. Purchases and sales of calculators during the month of January were as follows: City uses a periodic inventory system. According to a physical count, 150 calculators were on hand at January 31, 2019. M7-6 The cost of the inventory on January 31, 2019, under the FIFO method is: a. 400 b. 2,700 c. 3,100 d. 3,200 M7-7 The cost of the inventory on January 31, 2019, under the LIFO method is: a. 400 b. 2,700 c. 3,100 d. 3,200
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Calculate the estimate loss on the inventory
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