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Eastman Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. Corporate records disclose the following. Inventory (beginning) $ 80,000 Sales revenue $415,000 Purchases 290,000 Sales returns 21,000 Purchase returns 28,000 Gross profit % based on net selling price 35 % Merchandise with a selling price of $30,000 remained undamaged after the fire, and damaged merchandise has a net realizable value of $8,150. The company does not carry fire insurance on its inventory. Compute the amount of inventory fire loss. (Do not use the retail inventory method.)

Respuesta :

Answer:

The amount of inventory fire loss $ 66,400.

Explanation:

To compute he amount of inventory fire loss we have to find cost of closing unit. Detail calculation is given below.

Add

Opening Stock                   $  80,000

Purchase                             $ 290,000

Sale Return (21,000*0.65)    $  13,650

Less

Sold (415,000 * 0.65)      $ 269,750

Purchase return               $  28,000

Total Closing (BAL)          $ 85,900

Undamage stock               ($ 19,500)                 (0.65 * 30,000)

Fire Loss                             $ 66,400

Inventory can be defined as the most important part of a business entity engaged in the business of sale of goods. It is the part of the current asset that keeps on changing with the inflow and outflow of the units of inventory due to business operations.

The amount of inventory by fire loss is $66,400.

For determining the inventory by fire loss the following steps need to be followed:

1. Preparation of inventory stock statement.

2. The portion of undamaged stock is deducted from the closing balance of inventory.

The inventory stock statement is attached below in the image.

To know more about inventory, refer to the link:

https://brainly.com/question/15118949

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