Computing the fire loss incurred

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Question - Gross Profit Method

Eastman 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 Sales $415,000

(beginning ) 80,0000

Purchases 290,000 Sales returns 21,000

Purchase returns 28,000

Gross profit % based on net selling price 35%

Merchandise with a selling price of $30,000 remained undamaged after the fire, and damaged merchandise has a salvage value of $8,150. The company does not carry fire insurance on its inventory.

Instructions - Prepare a formal labeled schedule computing the fire loss incurred. (Do not use the retail inventory method.)

Reference no: EM131793427

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