Answered: How much is the loss on fire at Nov 6,…

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

Chapter8: Inventories: Special Valuation Issues

Section: Chapter Questions

Problem 11RE: Johnson Corporation had beginning inventory of 20,000 at cost and 35,000 at retail. During the year,...

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The following data were available for ABC Stores at Nov. 6, 20X1:
Purchases (Jan 1- Nov 5) P75,000
Purchase returns, P3,000
Inventory, Jan 1, P11,000
Sales, P125,000
Sales returns, P20,000
Gross profit rate is 50% of cost of sales.
The warehouse of ABC Store was burned down and 30% of the inventory was lost in the fire.

How much is the loss on fire at Nov 6, 20X1?

a. 3,900

b. 9,150

c. 13,000

d. 30,500

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