Problemeastman company lost most of its inventory in a fire, Ask an Expert

Accounting

Problem:

Eastman 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)	$ 84,000	Sales revenue	$428,400
Purchases	370,100	Sales returns	21,800
Purchase returns	29,200	Gross profit % based on net selling price	34	%

Merchandise with a selling price of $34,600 remained undamaged after the fire, and damaged merchandise has a net realizable value of $9,120. The company does not carry fire insurance on its inventory.

Required:

Question: Compute the amount of inventory fire loss. (Do not use the retail inventory method.)

Note: Please show the work not just the answer.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91164816

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