Compute the estimated cost of the June inventory

Reference no: EM132714219

Question 1 - Construction of Accounts to Compute the Estimated Inventory - Adapted from Reviewer in Auditing Practice

Aloha Company prepares monthly income statements. A physical inventory is taken only at year end; hence, month-end inventories must be estimated. All sales are made on account. The rate of mark-up on cost is 50%. The following information relates to the month of June 2020:

Accounts receivable, June 1, 2020 100,000

Accounts receivable, June 30, 2020 150,000

Collection of accounts receivable during June 2020 250,000

Inventory, June 1, 2020 180,000

Purchases of inventory during June 2020 160,000

Required - Compute the estimated cost of the June 30, 2020 inventory.

Question 2 - Computation of Inventory Fire Loss - Adapted from Intermediate Accounting Textbook

On the night of September 30, 2020, a fire destroyed most of the merchandise inventory of Paragon Company. ll goods were completely destroyed except for partially damaged goods that normally sell for P 100,000 and that had an estimated net realizable value of P 25,000 and undamaged goods that normally sell for P 60,000.

Inventory, January 1, 2020 660,000

Net purchases, January 1 through September 30, 2020 4,240,000

Net sales, January 1 through September 30, 2020 5,600,000

2019 20118 20117

Net Sales 5,000,000 3,000,000 1,000,000

Cost of goods sold 3,840,000 2,200,000 710,000

Required - Compute the amount of fire loss to be recognized on September 30, 2020?

Reference no: EM132714219

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