Financial Accounting
3rd Edition
ISBN: 9780133791129
Author: Jane L. Reimers
Publisher: Pearson Higher Ed
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Textbook Question
Chapter 5B, Problem 5PA
Estimate inventory. (LO 9). Hines Fruit Corp. sells fresh fruit to tourists on Interstate 75 in Florida. A tornado destroyed the entire inventory in late June. In order to File an insurance claim, Hazel and Gene, the owners of the company, must estimate the value of the lost inventory. Records from January 1 through the date of the tornado in June indicated that Hines Fruit Corp. started the year with $4,000 worth of inventory on hand. Purchases for the year amounted to $9,000, and sales up to the date of the tornado were $16,000. Gross profit percentage has traditionally been 30%.
Requirements
- 1. How much should Hazel and Gene request from the insurance company?
- 2. Suppose that one case of fruit was spared by the tornado. The cost of that case was $700. How much was the inventory loss under these conditions?
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Southern Distributors, Incorporated, supplies ice cream shops with various toppings for making sundaes.
On November 17, 2024, a fire resulted in the loss of all of the toppings stored in one section of the
warehouse. The company must provide its insurance company with an estimate of the amount of
inventory lost. The following information is available from the company's accounting records:
Inventory, January 1, 2024
Net purchases through November 17
Net sales through November 17
Historical gross profit ratio
Fruit
Toppings
Required:
1. Calculate the estimated cost of each of the toppings lost in the fire.
Marshmallow
Chocolate
Fruit
Toppings
$ 24,000
170,000
220,000
Estimated cost of lost
Inventory
20%
Marshmallow
Toppings
$ 7,400
40,000
59,000
30%
Chocolate
Toppings
$3,400
12,400
20,400
30%
Chapter 5B Solutions
Financial Accounting
Ch. 5B - Suppose Base Company began May with inventory of...Ch. 5B - Estimate inventory. (LO 9). Fantasy Games, Inc.,...Ch. 5B - (Estimate inventory. (LO 9). Knick-Knacks wants to...Ch. 5B - Estimate inventory. (LO 9). The following...Ch. 5B - Estimate inventory. (LO 9). The records of Florida...Ch. 5B - Estimate inventory. (LO 9). Hines Fruit Corp....Ch. 5B - Estimate inventory. (LO 9). Carries Cotton Candy...
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