Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Chapter 8, Problem 10E
Gross Profit Method: Estimation of Theft Loss You are requested by a client on September 28 to prepare an insurance claim for a theft loss that occurred on that day. You immediately take an inventory and obtain the following data:
The inventory on September 28 indicates that an inventory of $15,000 remains after the theft. During the past year, net sales were made at 50% above the cost of goods sold.
Required:
- 1. Compute the inventory lost during the theft. Round the gross profit percentage to 3 decimal places.
- 2. Next Level What concerns might you have about the inventory estimation under the gross profit method?
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You are called by Tim Duncan of Shamrock Co. on July 16 and asked to prepare a claim for insurance as a result of a theft that
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Inventory, July 1
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insurance covers only goods owned.
Claim against the insurance company $
3,600
Compute the claim against the insurance company. (Round ratios for computational purposes to 3 decimal places, e.g. 78.736% and
final answer to O decimal places, e.g. 28,987.)
LA
26700
Topic: SINGLE-ENTRY BOOKKEEPING
BARUMBUM Company suspects that there is missing inventory in its warehouse at December 31, 2021. All sales and purchases were made on account. Also, the gross profit rate based on net sales is consistent every year. To aid in your investigation, you obtained the following:
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Chapter 8 Solutions
Intermediate Accounting: Reporting And Analysis
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