On june 30 20x8 a flash flood damaged the warehouse and, Ask an Expert

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On June 30, 20X8, a flash flood damaged the warehouse and factory of Padway Corporation, completely destroying the work-in-process inventory. There was no damage to either the raw materials or finished goods inventories. A physical inventory taken after the flood revealed the following valuations:

Raw materials $62,000
Work-in-process 0
Finished goods 119,000
The inventory on January 1, 20X8, consisted of the following
Raw materials $30,000
Work-in-process 100,000
Finished goods 140,000

A review of the books and records disclosed that the gross profit margin historically approximately 25% of sales. The sales for the first six months of 20X8 were $340,000. Raw material purchases were $115,000. Direct labor costs for this period were $80,000 and manufacturing overhead has historically been applied at 50% of direct labor.

Required: Compute the value of the work-in-process inventory lost at June 30, 20X8. Show supporting computation in good form.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9968469

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