Question

Problem 9-6 Blossom 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) $ 79,100 Sales revenue $422,000 Purchases 288,300 Sales returns 21,400 Purchase returns 27,900 Gross profit % based on net selling price 33 % Merchandise with a selling price of $29,400 remained undamaged after the fire, and damaged merchandise has a net realizable value of $8,700. The company does not carry fire insurance on its inventory. Compute the amount of inventory fire loss. (Do not use the retail inventory method.) Inventory fire loss

Answer 1

Answer- The amount of inventory fire loss= $42700.

Explanation-

Particulars	Amount	Amount
	$	$
Opening inventory		79100
Purchases	288300
Less:- Purchase returns	27900	260400
Goods available (at cost)		339500
Sales revenue	422000
Less- Sales returns	21400
Net Sales	400600
Less:- Gross profit ($400600*33%)	132198	268402
Estimated ending inventory (unadjusted for damage)		71098
Less:- Goods on hand-undamaged (at cost)	$29400*(1-.33)	19698
Less:- Goods on hand-damaged (at net realizable value)		8700
Fire loss on inventory		42700