Problem 9-6 Your answer is incorrect. Try again. Skysong Company lost most of it

Question

Problem 9-6 Your answer is incorrect. Try again. Skysong 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) 81,600 Sales revenue 292,100 Sales returns $413,000 21,000 Purchases Purchase returns 27,800 Gross profit % based on net selling price 32 % Merchandise with a selling price of $29,500 remained undamaged after the fire, and damaged merchandise has a net realizable value of $8,000. 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 43800

Explanation / Answer

Particulars Working Amt Opening Inventory 81600 Add: Purchases 292100 Less: Returns 27800 264300 Cost of Goods Available for Sale 345900 Less: Cost of Goods Sold Sales 413000 Less: Returns 21000 Net Sales x (100-32)% 392000 266560 Closing Inventory before fire 79340 Less: Undamaged Goods (29500 x 68%) 20060 Less: Damaged Goods 8000 Loss by Fire 51280

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