You are called by Tim Duncan of Spurs Co. on July 16 and asked to prepare a clai

Question

You are called by Tim Duncan of Spurs Co. on July 16 and asked to prepare a claim for insurance as a result of a theft that took place the night before. You suggest that an inventory be taken immediately. The following data are available. Inventory, July 1 $ 40,650 Purchases—goods placed in stock July 1–15 90,490 Sales revenue—goods delivered to customers (gross) 121,800 Sales returns—goods returned to stock 3,840 Your client reports that the goods on hand on July 16 cost $33,520, but you determine that this figure includes goods of $6,810 received on a consignment basis. Your past records show that sales are made at approximately 40% over cost. Duncan’s insurance covers only goods owned. Compute the claim against the insurance company.

Explanation / Answer

cost of goods sold = (121800 - 3840) * 100/140

                              = 117960 * 100 /140

                              = $ 84257.14

Cost of goods sold = Beginning +purchase - ending inventory

       84257.14 = 40650 + 90490 - Ending inventory

        Ending inventory = 46882.86

Inventory lost due to theft = 46882.86- (33520-6810)

                        = 46882.86 - 26710

                       = 20172.86 to be claimed

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.