P9-4B (L05) (Gross Profit Method) Higgs Company lost most of its inventory in a fire in November just before the year-end physical inventory was taken. Corporate records disclose the following. Sales Inventory (beginning) Purchases $186,000 667,000 $863,000 64,000 25% Purchase returns Sales returns Gross profit % based on net selling price 46,000 Merchandise with a selling price of $65,000 remained undamaged after the fire, and damaged merchandise has a salvage value of $26,400. The company does not carry fire insurance on its inventory. Instructions Prepare a formal labeled schedule computing the fire loss incurred. (Do not use the retail inventory method.)
P9-4B (L05) (Gross Profit Method) Higgs Company lost most of its inventory in a fire in November just before the year-end physical inventory was taken. Corporate records disclose the following. Sales Inventory (beginning) Purchases $186,000 667,000 $863,000 64,000 25% Purchase returns Sales returns Gross profit % based on net selling price 46,000 Merchandise with a selling price of $65,000 remained undamaged after the fire, and damaged merchandise has a salvage value of $26,400. The company does not carry fire insurance on its inventory. Instructions Prepare a formal labeled schedule computing the fire loss incurred. (Do not use the retail inventory method.)
Chapter10: Inventory
Section: Chapter Questions
Problem 15EA: Shetland Company reported net income on the year-end financial statements of $125,000. However,...
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![P9-4B (L05) (Gross Profit Method) Higgs Company lost most of its inventory in a fire in November just before the year-end
physical inventory was taken. Corporate records disclose the following.
Sales
Inventory (beginning)
Purchases
Purchase returns
$186,000
667,000
$863,000
64,000
25%
Sales returns
Gross profit % based on
net selling price
46,000
Merchandise with a selling price of $65,000 remained undamaged after the fire, and damaged merchandise has a salvage value
of $26,400. The company does not carry fire insurance on its inventory.
Instructions
Prepare a formal labeled schedule computing the fire loss incurred. (Do not use the retail inventory method.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbe4af916-7df4-478b-8fe4-d1668454b06d%2F61ab675b-d1e8-439e-bd6c-9328f0ec4a7e%2Fbxbfgn_processed.png&w=3840&q=75)
Transcribed Image Text:P9-4B (L05) (Gross Profit Method) Higgs Company lost most of its inventory in a fire in November just before the year-end
physical inventory was taken. Corporate records disclose the following.
Sales
Inventory (beginning)
Purchases
Purchase returns
$186,000
667,000
$863,000
64,000
25%
Sales returns
Gross profit % based on
net selling price
46,000
Merchandise with a selling price of $65,000 remained undamaged after the fire, and damaged merchandise has a salvage value
of $26,400. The company does not carry fire insurance on its inventory.
Instructions
Prepare a formal labeled schedule computing the fire loss incurred. (Do not use the retail inventory method.)
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