On November 21, 2019, a fire at Hen Company's warehouse caused severe damage to its entire inventory of Product Tex. Hen estimates that all usable damaged goods can be sold for $17,000. The following information was available from the records of Hen'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 250,000 Based on recent history, Hen's gross profit ratio on Product Tex is 43% of net sales. Required: Calculate the estimated loss on the inventory from the fire, using the gross profit method.
On November 21, 2019, a fire at Hen Company's warehouse caused severe damage to its entire inventory of Product Tex. Hen estimates that all usable damaged goods can be sold for $17,000. The following information was available from the records of Hen'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 250,000 Based on recent history, Hen's gross profit ratio on Product Tex is 43% 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
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 14E: On January 5, 2019, ShoeKing Corp. sells for cash 500 pairs of volleyball shoes to FootAction, a...
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On November 21, 2019, a fire at Hen Company's warehouse caused severe damage to its entire inventory of Product Tex. Hen estimates that all usable damaged goods can be sold for $17,000. The following information was available from the records of Hen'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 250,000 Based on recent history, Hen's gross profit ratio on Product Tex is 43% of net sales. Required: Calculate the estimated loss on the inventory from the fire, using the gross profit method.
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