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Prepare a formal labeled schedule computing the fire loss

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Reference no: EM13516644

(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 (beginning)

$   80,000

Sales

$415,000  

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: EM13516644

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