Exercise 9-17 You are called by Tim Duncan of Sheridan Co. on July 16 and asked

Question

Exercise 9-17

You are called by Tim Duncan of Sheridan Co. on July 16 and asked to prepare a claim for insurance as a result of a theft that took place the night before. You suggest that an inventory be taken immediately. The following data are available.

Your client reports that the goods on hand on July 16 cost $30,100, but you determine that this figure includes goods of $6,400 received on a consignment basis. Your past records show that sales are made at approximately 40% over cost. Duncan’s insurance covers only goods owned.

Compute the claim against the insurance company. (Round ratios for computational purposes to 2 decimal places, e.g. 78.73% and final answer to 0 decimal places, e.g. 28,987.)

Explanation / Answer

Calculation of Claim against the insurance company Cost Inventory July 1 $35,600 Add : Purchases $77,300 Less : Cost of good sold (net) [$117800/140%] $84,143 Cost of goods on hand July 16 $28,757 Less : Value of Goods received on Consignment $6,400 Claim against the Insurance Company $22,357

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