2 On November 21, 2016, a fire at Hodge Company\'s warehouse caused severe damag

Question

2 On November 21, 2016, a fire at Hodge Company's warehouse caused severe damage to its entire inventory of Product Tex. Hodge estimates that all usable damaged goods can be sold for $14,000. The following information was available from the records of Hodge's periodic inventory system 2.5 points $110,000 142,000 222,000 Inventory, November 1 Net purchases from November 1, to the Hint date of the fire Net sales from November 1, to the date of Print the fire References Based on recent history, Hodge's gross profit ratio on Product Tex is 30% of net sales. Required: Calculate the estimated loss on the inventory from the fire, using the gross profit method. Estimated loss from fire

Explanation / Answer

Cost of Inventory Damage in fire: opening inventory on Nov 1 110,000 Add: Purchase during the year 142,000 Less: Cost of goods sold 155400 (Sales i.e $222,000 - Gross profit@30%) Cost of Inventory held on date of fire 96,600 Less: salvage value 14,000 Estimated Loss of Inventory from Fire 82,600

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

---

---

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