Inventory Bold Corp. lost most of its inventory in a fire in December, just befo

Question

Inventory

Bold Corp. 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 $ 440,000 --------Sales $ 1,444,100

Purchases for the year 940,000 ---------Sales returns 52,000

Purchase returns 66,000 --------------Gross margin on sales 45 %

Merchandise with a selling price of $44,000 remained undamaged after the fire. Damaged merchandise with an original selling price of $30,000 had a net realizable value of $10,600.

Calculate the amount lost because of the fire, assuming that the corporation had no insurance coverage. (Round answer to 0 decimal places, e.g. 5,275.)

Loss of inventory due to fire  $________________

Explanation / Answer

Calculate loss of inventory :

Beginning inventory 440000 Purchase 940000 Less; Purchase return (66000) Net purchase 874000 Total goods available for sale 1314000 Less: Cost of goods sold Sales 1444100 Less: Sales return (52000) Net sales 1392100 Less: Gross margin (626445) Cost of goods sold (765655) Ending inventory cost 548345 Undamaged goods sold (44000*55%) (24200) Damage goods cost 524145 Less: Damage goods NRV (10600) Amount lost because of fire 513545

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