Smith Distributors, Inc., supplies ice cream shops with various toppings for mak

Question

Smith Distributors, Inc., supplies ice cream shops with various toppings for making sundaes. On November 17, 2013, a fire resulted in the loss of all of the toppings stored in one section of the warehouse. The company must provide its insurance company with an estimate of the amount of inventory lost. The following information is available from the company's accounting records:

Calculate the estimated cost of each of the toppings lost in the fire.

Toppings Estimated Cost of Lost Inventory

Fruit

Marshmallow

Chocolate

Smith Distributors, Inc., supplies ice cream shops with various toppings for making sundaes. On November 17, 2013, a fire resulted in the loss of all of the toppings stored in one section of the warehouse. The company must provide its insurance company with an estimate of the amount of inventory lost. The following information is available from the company's accounting records:

Explanation / Answer

Fruit toppings ($) Marshmallow Toppings Chocolate topings ($) Inventory, Jan. 1, 2013 (a) 21,000 7,100 3,100 Net purchases through Nov. 17 (b) 155,000 37,000 12,100 Net sales through Nov. 17 (c ) 205,000 56,000 20,100 Historical gross profit ratio (d) 20% 35% 35% Gross profit (e = c*d) 41000 19600 7035 Cost of goods sold (f = c -e) 164,000 36,400 13,065 Inventory, Nov. 17, 2013 (g = a + b - f) 12,000 7,700 2,135 Estimated cost of fruit toppings lost in fire 12,000 Estimated cost of Marshmallo toppings lost in fire 7,700 Estimated cost of Chocolate toppings lost in fire 2,135

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