Problem 13-6 (AICPA Adapted) On December 31, 2020, a big fire caused severe damage to the warehouse of Claire Company. 2020 Beginning inventory Purchases Purchase return Sales 2019 1,000,000 8,000,000 500,000 9,000,000 5,600,000 100,000 6,000,000 At the beginning of 2020, the entity changed the policy on the selling prices of the merchandise in order to produce a gross profit rate of 5% higher than the gross profit rate in 2019. Undamaged merchandise marked to sell at P500,000 was salvaged. Damaged merchandise marked to sell at P100,000 had an estimated realizable value of P10,000. What amount should be reported as inventory fire loss? a. 2,200,000 b. 1,840,000 c. 1,600,000 d. 1,780,000

E 7-8 Sales returns ⒸLO7-4 Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2024 with a refund liability of $300,000. During 2024, Halifax sold merchandise on account for $11,500,000. Halifax's merchandise costs are 65% of merchandise selling price. Also during the year, customers returned $450,000 in sales for credit, with $250,000 of those being returns of merchandise sold prior to 2024, and the rest being merchandise sold during 2024. Sales returns, estimated to be 4% of sales, are recorded as an adjusting entry at the end of the year. Required: 1. Prepare entries to (a) record actual returns in 2024 of merchandise that was sold prior to 2024; (b) record actual returns in 2024 of merchandise that was sold during 2024; and (c) adjust the refund liability to its appropriate balance at…

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Current Attempt in Progress Cullumber Company began operations on January 1, 2024, adopting the conventional retail inventory system. None of the company's merchandise was marked down in 2024 and, because there was no beginning inventory, its ending inventory for 2024 of $31,248 would have been the same under either the conventional retail system or the LIFO retail system. On December 31, 2025, the store management considers adopting the LIFO retail system and desires to know how the December 31, 2025, inventory would appear under both systems. All pertinent data regarding purchases, sales, markups, and markdowns are shown below. There has been no change in the price level. Cost Retail Inventory, Jan. 1, 2025 $31,248 $50,400 Markdowns (net) 10,920 Markups (net) 18,480 Purchases (net) 109,960 149,520 Sales (net) 140,280 Determine the cost of the 2025 ending inventory under both (a) the conventional retail method and (b) the LIFO retail method. (Round ratios for computational purposes to…