Problem 9-7 On April 15, 2018, fire damaged the office and warehouse of Grouper
ID: 2566768 • Letter: P
Question
Problem 9-7
On April 15, 2018, fire damaged the office and warehouse of Grouper Corporation. The only accounting record saved was the general ledger, from which the balance sheet data below was prepared.
GROUPER CORPORATION
MARCH 31, 2018
Cash
$21,660
Accounts receivable
42,720
Inventory, December 31, 2017
68,450
Land
34,230
Buildings
99,060
Accumulated depreciation
$38,347
Equipment
3,539
Accounts payable
21,530
Other accrued expenses
2,944
Common stock
102,200
Retained earnings
48,650
Sales revenue
130,490
Purchases
48,650
Miscellaneous expense
25,852
$344,161
$344,161
The following data and information have been gathered.
Year Ended
December 31
2017
2016
Inventory with a cost of $6,960 was salvaged and sold for $3,520. The balance of the inventory was a total loss.
Inverntory fire loss?
GROUPER CORPORATION
MARCH 31, 2018
Cash
$21,660
Accounts receivable
42,720
Inventory, December 31, 2017
68,450
Land
34,230
Buildings
99,060
Accumulated depreciation
$38,347
Equipment
3,539
Accounts payable
21,530
Other accrued expenses
2,944
Common stock
102,200
Retained earnings
48,650
Sales revenue
130,490
Purchases
48,650
Miscellaneous expense
25,852
$344,161
$344,161
Explanation / Answer
Grouper Corporation Computation of Inventory Fire Loss April 15, 2017 Inventory, 1/1/18 $68,450 Purchases, 1/1/ – 3/31/18 $48,650 April merchandise shipments paid $3,261 Unrecorded purchases on account $15,162 Total $135,523 Less: Shipments in transit $2,240 Merchandise returned $890 -$3,130 Merchandise available for sale $132,393 Less: estimated cost of sale Sales revenue, 1/1/ – 3/31/18 $130,490 Sales revenue, 4/1/ – 4/15/18 Receivables acknowledged at 4/15/18 $44,510 Estimated receivables not acknowledged $8,320 Total $52,830 Add collections, 4/1/ – 4/15/18 ($13,150 - $890) $12,260 Total $65,090 Less receivables, 3/31/18 -$42,720 $22,370 Total sales 1/1/ – 4/15/15 $152,860 Less gross profit (41.96%* X $152,860) -$64,141.64 $88,718.36 Estimated merchandise inventory $43,674.64 Less: Sale of salvaged inventory -$3,520 Inventory fire loss $40,154.64 Computation of Gross Profit Rate Net sales, 2016 $354,540 Net sales, 2017 $506,330 Total Net Sales $860,870 Beginning inventory $67,400 Purchases 2016 $225,420 Purchases 2017 $275,270 Total $568,090 Less: Ending Inventory -$68,450 $499,640 Gross profit $361,230 Gross profit Rate = $361230/$860870 41.96%
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