Problem 9-6 Cullumber Company lost most of its inventory in a fire in December j

Question

Problem 9-6 Cullumber 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) Purchases Purchase returns 80,800 287,600 28,500 Sales revenue $420,800 20,700 Sales returns Gross profit % based on net selling price Merchandise with a selling price of $29,900 remained undamaged after the fire, and damaged me undamaged after the fire, and damaged merchandise has a net realizable value of $7,700. 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 Click if you would like to Show Work for this question: 00en Show Work Question Attempts: 0 of 15 used SAVE FOR LATER

Explanation / Answer

the following is the calculation of inventory fire loss:

beginning inventory 80,800 add: net purchases (287,600 - 28,500) 259,100 less:cost of sales (420,800 - 20,700) =>400,100 - (400,100*32%) (272,068) less: merchandise undamaged (29,900 - 32%) (20,332) less:net realisable value (7,700) inventory fire loss 39,800

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