Estimating Inventory Loss Using Gross Profit MethodOn November 15, a fire destroyed Youngstown Inc.'s warehouse where inventory is stored. It is estimated that $12,000 can be realized from sale of usable but damaged inventory. The accounting recordsconcerning inventory reveal the following. Gross profit averaged 35% of net sales.Inventory at Nov. 1Purchases from Nov. 1 to Nov. 15Net sales from Nov. 1 to Nov. 15$144,000168,000240,000Requireda. Calculate the estimated loss of inventory using the gross profit method. $ 144,000b. Assume instead that the markup is 25% of cost. Estimate the loss of inventory using the gross profit method. $ 120,000X

The gross profit method is used to determine the value of ending inventory when there is a lack of…

Answered: On November 15, a fire destroyed…

FINANCIAL ACCOUNTING

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Author:Libby

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Chapter1: Financial Statements And Business Decisions

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Beltrack Co. has a normal gross profit of 45%. On the night of October 5, 2020., welders remodeling a section of the warehouse neglected to turn off all of their equipment, and a resulting fire did damage to the warehouse and some of the inventory. The following is made available to you from January 1, 2020 to October 5, 2020: Sales Delivery Expense $3,400 Inventory after fire on Oct 6th $66,500 Inventory on January 1, 2018 $211,500 Purchase Returns $7,200 Purchases $212,400 Sales $330,500 Sales Returns $4,200 Transportation In $4,800 a Required: Prepare a schedule based on the above date to compute the Cost of Goods Available for Sale Give your answer here b Required: What is the historical cost of goods…
Riverbed Inc.’s April 30 inventory was destroyed by the explosion of an underground oil tank. January 1 inventory was $322,000 and purchases for January through April totalled $790,000. Sales for the same period were $1.2 million. Riverbed 's normal gross profit percentage is 30%.Using the gross profit method, estimate the amount of Riverbed 's April 30 inventory that was destroyed. Estimated ending inventory destroyed in explosion $enter a dollar amount of the ending inventory
Blue Corporation's April 30 inventory was destroyed by fire. January 1 inventory was $155,000, and purchases for January through April totaled $467,300. Sales revenue for the same period was $684,500. Blue's normal gross profit percentage is 25% on sales. Using the gross profit method, estimate Blue's April 30 inventory that was destroyed by fire. Estimated ending inventory destroyed in fire $
On November 21, 2024, a fire at Hodge Company’s warehouse caused severe damage to its entire inventory of Product Tex. Hodge estimates that all usable damaged goods can be sold for $26,000. The following information was available from the records of Hodge’s periodic inventory system: Inventory, November 1, 2024 $ 170,000 Net purchases from November 1, to the date of the fire 154,000 Net sales from November 1, to the date of the fire 234,000 Based on recent history, Hodge’s gross profit ratio on Product Tex is 40% of net sales. Required: Calculate the estimated loss on the inventory from the fire, using the gross profit method.
Blossom Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. The corporation's books disclosed the following. Beginning inventory Purchases for the year Purchase returns $168,500 Amount of the loss 412,700 30,100 Sales revenue Sales returns Rate of gross profit on net sales $628,200 25,600 20 % Merchandise with a selling price of $20,300 remained undamaged after the fire. Damaged merchandise with an original selling price of $15,200 had a net realizable value of $5,200. Compute the amount of the loss as a result of the fire, assuming that the corporation had no insurance coverage.
Sandhill Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $ 37,240. Purchases since January 1 were $ 70,560; freight-in, $ 3,332; purchase returns and allowances, $ 2,352. Sales are made at 33 1/3% above cost and totaled $ 111,000 to March 9. Goods costing $ 10,682 were left undamaged by the fire; remaining goods were destroyed.
On January 1, a store had inventory of $48,000. January purchases were $46,000 and January sales were $95,000. On February 1 a fire destroyed most of the inventory. The rate of gross profit was 20% of sales. Merchandise with a selling price of $5,000 remained undamaged after the fire. Compute the amount of the fire loss, assuming the store had no insurance coverage. Label all figures.
7. The inventory was destroyed by fire on December 31. The following data were obtained from the accounting records:

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