Exercise 9-17 You are called by Tim Duncan of Sandhill Co. on July 16 and asked

Question

Exercise 9-17 You are called by Tim Duncan of Sandhill 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

4,400

Your client reports that the goods on hand on July 16 cost $29,000, but you determine that this figure includes goods of $6,600 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. (Round ratios for computational purposes to 2 decimal places, e.g. 78.73% and final answer to 0 decimal places, e.g. 28,987.)

Inventory, July 1 $ 37,100 Purchases—goods placed in stock July 1–15 82,500 Sales revenue—goods delivered to customers (gross) 111,000 Sales returns—goods returned to stock

4,400

Explanation / Answer

Inventory, July 1 37100 Purchases—goods placed in stock July 1–15 82500 Goods available 119600 Sales 110000 Less: Sales returns 4400 Net sales 105600 Less: Gross Profit 30170 Sales at cost 75430 Estimated inventory 44170 Less: Goods on hand 22400 Claim against the insurance company 21770

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