Windy City Insurance Ltd. has received a fire-loss claim of 45,000 from Balton Corp, A fire destroyed Balton’s inventory on May 25, 2015. Bolton has average gross profit of 35%. You have obtained the following information:                       Inventory, May 1, 2015                                            $  80,000                         Purchases, May 1- May 25                                   $ 150,000                         Sales, May 1 –May 25                                        $ 300,000 Required: Calculate the estimated amount of inventory lost in the fire. How reasonable is Balton’s claim

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Q: None

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.