Wormold Industries suffered a fire in its warehouse on March 4, 2021. The warehouse was full of finished goods, and after reviewing the damage, management determined that inventory, with a retail selling price of $90,000, was not damaged by the fire. For the period from January 1, 2021, to March 4, 2021, accounting records showed the following: Purchases $650,000 Purchase returns 16,000 Sales revenue 955,000 The inventory balance on January 1, 2021, was $275,000, and the company has historically earned a gross profit percentage of 35%. Required: Use the gross profit method to determine the cost of inventory damaged by the fire.
Wormold Industries suffered a fire in its warehouse on March 4, 2021. The warehouse was full of finished goods, and after reviewing the damage, management determined that inventory, with a retail selling price of $90,000, was not damaged by the fire. For the period from January 1, 2021, to March 4, 2021, accounting records showed the following: Purchases $650,000 Purchase returns 16,000 Sales revenue 955,000 The inventory balance on January 1, 2021, was $275,000, and the company has historically earned a gross profit percentage of 35%. Required: Use the gross profit method to determine the cost of inventory damaged by the fire.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 11RE: At the end of 2019, Manny Company recorded its ending inventory at 350,000 based on a physical...
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Wormold Industries suffered a fire in its warehouse on March 4, 2021. The warehouse was full
of finished goods, and after reviewing the damage, management determined that inventory,
with a retail selling price of $90,000, was not damaged by the fire.
For the period from January 1, 2021, to March 4, 2021, accounting records showed the
following:
Purchases $650,000
Purchase returns 16,000
Sales revenue 955,000
The inventory balance on January 1, 2021, was $275,000, and the company has historically
earned a gross profit percentage of 35%.
Required: Use the gross profit method to determine the cost of inventory damaged by the fire.
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