Smith Distributors, Inc., supplies ice cream shops with various toppings for making sundaes. On November 17, 2016, a fire resulted in the loss of all of the toppings stored in one section of the warehouse. The company must provide its insurance company with an estimate of the amount of inventory lost. The following information is available from the company's accounting records: Inventory, January 1, 2016 Net purchases through Nov. 17 Net sales through Nov. 17 Historical gross profit ratio Fruit Toppings $ 30,000 200,000 250,000 15% Marshmallow Toppings $8,000 46,000 65,000 25% Chocolate Toppings $ 4,000 13,000 21,000 30%
Smith Distributors, Inc., supplies ice cream shops with various toppings for making sundaes. On November 17, 2016, a fire resulted in the loss of all of the toppings stored in one section of the warehouse. The company must provide its insurance company with an estimate of the amount of inventory lost. The following information is available from the company's accounting records: Inventory, January 1, 2016 Net purchases through Nov. 17 Net sales through Nov. 17 Historical gross profit ratio Fruit Toppings $ 30,000 200,000 250,000 15% Marshmallow Toppings $8,000 46,000 65,000 25% Chocolate Toppings $ 4,000 13,000 21,000 30%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Smith Distributors, Inc., supplies ice cream shops with various toppings for making sundaes. On November
17, 2016, a fire resulted in the loss of all of the toppings stored in one section of the warehouse. The
company must provide its insurance company with an estimate of the amount of inventory lost. The
following information is available from the company's accounting records:
Inventory, January 1, 2016
Net purchases through Nov. 17
Net sales through Nov. 17
Historical gross profit ratio
Toppings
Fruit
Fruit
Toppings
$ 30,000
Marshmallow
Chocolate
200,000
250,000
15%
Required:
1. Calculate the estimated cost of each of the toppings lost in the fire.
Estimated cost of
lost inventory
Marshmallow
Toppings
$8,000
46,000
65,000
25%
Chocolate
Toppings
$ 4,000
13,000
21,000
30%
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