On November 21, 2016, 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 $17,000. The following information was available from the records of Hodge's periodic inventory system: Inventory, November 1 $ 125,000 Net purchases from November 1, to the date of the fire 145,000 Net sales from November 1, to the date of the fire 225,000 Based on recent history, Hodge's gross profit ratio on Product Tax is 40% of net sales. Required: Calculate the estimated loss on the inventory from the fire, using the gross profit method.
On November 21, 2016, 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 $17,000. The following information was available from the records of Hodge's periodic inventory system: Inventory, November 1 $ 125,000 Net purchases from November 1, to the date of the fire 145,000 Net sales from November 1, to the date of the fire 225,000 Based on recent history, Hodge's gross profit ratio on Product Tax is 40% of net sales. Required: Calculate the estimated loss on the inventory from the fire, using the gross profit method.
Century 21 Accounting Multicolumn Journal
11th Edition
ISBN:9781337679503
Author:Gilbertson
Publisher:Gilbertson
Chapter20: Accounting For Inventory
Section: Chapter Questions
Problem 1CP
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Question
Calculate the estimated loss
Transcribed Image Text:On November 21, 2016, 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 $17,000. The following information
was available from the records of Hodge's periodic inventory system:
Inventory, November 1 $ 125,000 Net purchases from November 1, to the
date of the fire 145,000 Net sales from November 1, to the date of the fire
225,000 Based on recent history, Hodge's gross profit ratio on Product Tax
is 40% of net sales.
Required: Calculate the estimated loss on the inventory from the fire, using
the gross profit method.
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