A fire destroyed the churchill companys warehouse on march, Ask an Expert

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A fire destroyed the Churchill Company's warehouse on March 15, 2014. Only goods with a normal selling price of $12,500 and a net realizable value of $5,000 were saved. The following information is available from the company's records:

Inventory in warehouse, 1/1/14	$250,000
Purchases, 1/1/14-3/15/14	620,000
Purchase returns	9,500
Freight-in	14,000
Sales, 1/1/13-3/15/14	850,000
Sales returns	20,000

For the period from 2009 through 2013, Churchill had a gross profit of $2,100,000 on net sales of $6,000,000.

Required:

Estimate Churchill's inventory loss from the fire using the gross profit method.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9945521

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