Sheridan Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand onJanuary 1 was $44,080. Purchases since January 1 were $83, 520; freight - in, $3, 944; purchase returns andallowances, $2,784. Sales are made at 33 1/3% above cost and totaled $135,000 to March 9. Goodscosting $12, 644 were left undamaged by the fire; remaining goods were destroyed

Cost of goods sold:Cost of goods sold (COGS) refers to the direct costs of producing the goods sold…

Answered: Sheridan Legler requires an estimate of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Blue Corporation's April 30 inventory was destroyed by fire. January 1 inventory was $155,000, and purchases for January through April totaled $467,300. Sales revenue for the same period was $684,500. Blue's normal gross profit percentage is 25% on sales. Using the gross profit method, estimate Blue's April 30 inventory that was destroyed by fire. Estimated ending inventory destroyed in fire $
On September 22, 2018, a flood destroyed the entire merchandise inventory on hand in a warehouse owned by the Rocklin Sporting Goods Company. The following information is available from the records of the company's periodic inventory system: Inventory, Jamuary 1, 2018 Net purchases, January 1 through September 22 Net sales, January 1 through Septenber 22 Gross profit ratio $144, 000 374, 000 570, 000 30% Required: Complete the below table to estimate the cost of inventory destroyed in the flood using the gross profit method. Beginning inventory Plus: Net purchases Cost of goods available for sale Less: Cost of goods sold: Net sales Less: Estimated gross profit Estimated cost of goods sold Estimated cost of inventory destroyed
Assume that the following was extracted from Massy’s accounting information system foroperations at this outlet for the week, up to the time of the fire.Sales 830,000 Purchases 580,000 Sales Returns 42,000 Purchases Returns 56,000 Beginning Inventory 160,000 The company’s gross profit percent based on net selling price is 40%. Merchandise with aselling price of $60,000 remained undamaged after the fire. Some smoke damaged merchandisehad a residual value of $18,200. The company is in the process of estimating its fire loss on inventory using the gross profitmethod, for insurance purposes. Required:Prepare a detailed schedule to compute the estimated fire loss incurred on inventory.
(i)The inventory costing $ 150,000 being ordered by customers before the year end was excluded from the ending inventory balance as they are set aside for delivery after year end. The ending balance of inventory as on the statement of financial position was $ 600,000. (ii) Inventory list shows 40 boxes of rice but only 38 boxes were found in the warehouse. (iii) The inventory has a cost of $600,000 and realizable value of $540,000 as the items are outdated. The ending balance of inventory as on the statement of financial position was $ 600,000. Q) For each misstatement above, explain which of the above assertions is violated. (Each assertion can only be used once.) Also, give the relevant audit objective the auditor should focus on when detecting the misstatement if the assertion is "Valuation and Allocation "
On November 21, 2024, a fire at Hodge Company’s warehouse caused severe damage to its entire inventory of Product Tex. Hodge estimates that all usable damaged goods can be sold for $26,000. The following information was available from the records of Hodge’s periodic inventory system: Inventory, November 1, 2024 $ 170,000 Net purchases from November 1, to the date of the fire 154,000 Net sales from November 1, to the date of the fire 234,000 Based on recent history, Hodge’s gross profit ratio on Product Tex is 40% of net sales. Required: Calculate the estimated loss on the inventory from the fire, using the gross profit method.
A flood destroyed Toshiaki Company's warehouse and all of its inventory. Toshiaki will use the gross profit method to determine its inventory in the warehouse at the time. Toshiaki's management believes that the average of the last two years' gross profit percentage is a good estimate of the gross profit in the current year. Sales last year were $7,700 and $6,100 in the year before. Its cost of goods sold was $4,466 last year and $3,782 the year before. Toshiaki's prior-year balance sheet reported inventory of $450. Before the flood, net sales were $5,200. Toshiaki purchased $3,900 of inventory. Read the requirements. Requirement a. Use the gross profit method to determine Toshiaki's historical gross profit percentage. Identify the appropriate formula and then calculate Toshiaki's historical gross profit percentage for each year. (Round the gross profit percentage to one decimal place, X.X%.) Gross profit % Two Year's Prior % Prior Year % Requirements Round percentages to one decimal…
Sandhill Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $ 37,240. Purchases since January 1 were $ 70,560; freight-in, $ 3,332; purchase returns and allowances, $ 2,352. Sales are made at 33 1/3% above cost and totaled $ 111,000 to March 9. Goods costing $ 10,682 were left undamaged by the fire; remaining goods were destroyed.
On January 1, a store had inventory of $48,000. January purchases were $46,000 and January sales were $95,000. On February 1 a fire destroyed most of the inventory. The rate of gross profit was 20% of sales. Merchandise with a selling price of $5,000 remained undamaged after the fire. Compute the amount of the fire loss, assuming the store had no insurance coverage. Label all figures.
7. The inventory was destroyed by fire on December 31. The following data were obtained from the accounting records:
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David Patel was at home when he received a call from the fire department telling him his store had burned. His business was a total loss. The insurance company asked him to prove his inventory loss. For the year, until the date of the fire, Patel's company had sales of $450,000 and purchases of $280,000. Freight-in amounted to $13,700, and beginning inventory was $45,000. Patel always priced his goods to achieve a gross margin of 40 percent. Compute patel's estimated inventory loss.

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