Question: On November 21, 2013, 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 $12,000. The following information was available from Hodge's accounting records for Product Tex: Inventory at November 1, 2013: $104,000 Purchases from November 1, 2013, to date of fire : 143,000 Net sales from November 1, 2013, to date of fire : 236,000 Based on recent history, Hodge had a gross margin (profit) on Product Tex of 30% of net sales. Prepare a schedule to calculate the estimated loss on the inventory in the fire, using the gross profit method.
Question: On November 21, 2013, 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 $12,000. The following information was available from Hodge's accounting records for Product Tex: Inventory at November 1, 2013: $104,000 Purchases from November 1, 2013, to date of fire : 143,000 Net sales from November 1, 2013, to date of fire : 236,000 Based on recent history, Hodge had a gross margin (profit) on Product Tex of 30% of net sales. Prepare a schedule to calculate the estimated loss on the inventory in the fire, using the gross profit method.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Question:
On November 21, 2013, 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 $12,000. The following
information was available from Hodge's accounting
records for Product Tex:
Inventory at November 1, 2013: $104,000
Purchases from November 1, 2013, to date of fire :
143,000
Net sales from November 1, 2013, to date of fire :
236,000
Based on recent history, Hodge had a gross margin
(profit) on Product Tex of 30% of net sales.
Prepare a schedule to calculate the estimated loss on the
inventory in the fire, using the gross profit method.
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