Question 1 Sarasota Company lost most of its inventory in a fire in December jus

Question

Question 1 Sarasota Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. The corporation's books disclosed the following Beginning inventory Purchases for the year Purchase returns $162,800Sales revenue 353,000 Sales returns $712,400 22,600 30,300 Rate of gross profit on net sales 40 % Merchandise with a selling price of $21,000 remained undamaged after the fire. Damaged merchandise with an original selling price of $13,900 had a net realizable value of $5,300. Compute the amount of the loss as a result of the fire, assuming that the corporation had no insurance coverage Amount of the loss s

Explanation / Answer

Beginning inventory 162800 Add: Net purchases 322700 =353000-30300 Cost of goods available for sale 485500 Less: Cost of goods sold 413880 =(712400-22600)*(1-0.4) Less: Cost of goods undamaged 12600 =21000*(1-0.4) Less: Net realizabe value 5300 Amount of the loss 53720 (485500-413880-12600-5300)

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