Reference no: EM13603279
On April 15 2011, fire damaged the office and warehouse of Stanislaw Corporation. The only accounting record saved was the general ledger, from which the trial balance below was prepared.
Stanislaw Corp
Trial Balance
March 31, 2011
Cash 20,000
Accounts receivable 40,000
Inventory, December 31, 2010 75,000
Land 35,000
Building and equipment 110,000
Accumulated depreciation $ 41,300
Other Assets 3,600
Accounts Payable 23,700
Other expense accruals 10,200
Capital Stock 100,000
Retained earnings 52,000
Sales 135,000
Purchases 52,000
Other expenses 26,600
362,200 362,200
The following data and information have been shared
1 The Fiscal year of the corporation ends on December 31.
2 An examination of the April bank statement and canceled checks revealed that checks written during the period April 1 - 15 totaled $ 13,000; 5,700 paid to accounts payable as March 31, 3,400 for April merchandise shipments, and 3,900 paid for others expenses. Deposits during the same period amounted to 12,950 which consisted of receipts on accounts from customers with the exception of a $ 950.00 refund from a vendor for merchandise returning in April.
3 Correspondence with suppliers revealed unrecorded obligation at April 15 of 15,000 for April merchandise shipments including2,300 for shipments in transit (f.o.b. shipping point) on that date.
4 Customers acknowledged indebtedness of 46,000 at April 15, 2011. It was also estimated that customers owed anothers 8,000 that will never be acknowledged or recovered. Of the acknowledged indebtedness, $600 will probably be uncollectible.
5 The Companies insuring the inventory agreed that the corporation's fire loss claims should be based on the assumption that the overall gross profit ratio for the past 2 years was in effect during the current year. The corporation's audited financial statements disclosed this information:
Year Ended
December 31 2010 2009
Net Sales $530,000 $390,000
Net purchases 280,000 235,000
Beginning Inventory 50,000 66,000
Ending inventory 75,000 50,000
6 Inventory with a cost of $7,000 was salvaged and sold for 3,500. The balance of the inventory was a total loss
Instructions: Prepare a schedule computing the amount of inventory fire loss. The supporting schedule of the computation of the gross profit should be in good form.