On February 26, a hurricane destroyed the entire inventory stored in a warehouse owned by the Rockford Corporation. The following information is available from the records of the company’s periodic inventory system: beginning inventory, $220,000; purchases and net sales from the beginning of the year through February 26, $400,000 and $600,000, respectively; gross profit ratio, 30%. Estimate the cost of the inventory destroyed by the hurricane using the gross profit method.

Q: On February 26, a hurricane destroyed the entire inventory stored in a warehouse owned by the…

A: Given,  Gp ratio = 40% = 100 * Gross profit / Net sales Purchase = 420000 Net sales = 620000…

Q: On February 26 a hurricane destroyed the entire inventory stored in a warehouse owned by the…

A: Cost of inventory destroyed can be found out by applying the gross profit ratio on sale and finding…

Q: A flood recently destroyed many of the financial records of Rizal Company. The company uses an…

A: Average Cost of Inventory Valuation System:-This is a method of computing inventory by dividing…

Q: Adams Corporation estimates that it lost $75,000 in inventory from a recent flood. The following…

A: Formula to calculate gross profit ratio:

Q: On September 22, 2021, a flood destroyed the entire merchandise inventory on hand in a warehouse…

A: Cost of goods available for sale =      Beginning inventory + net purchases

Q: Eastman Company lost most of its inventory in a fire in December just before the year-end physical…

A: Net sales = Sales revenue - Sales returns = $415000 - $21000 = $394000 Gross profit = Net sales x…

Q: A fire in July, just before the year-end physical inventory, destroyed the majority of GH…

A: Gross profit is the sales revenue which is over and above cost of goods sold. Cost of goods sold…

Q: On February 7 of the following year,the merchandise inventory was destroyed by fire based on the…

A:

Q: On March 15, a fire destroyed MyCompany's entire retail inventory. The inventory on hand as of…

A: Cost of goods sold = Beginning inventory + Purchases + Freight in - Closing inventory

Q: On April 15 of the current year, a fire destroyed the entire uninsured inventory of a retail store.…

A: Gross profit means the difference between the sale revenue and cost of production. Sale means the…

Q: A fire destroyed a warehouse of the Goren Group, Inc., on May 4, 2021. Accounting records on that…

A: Cost of Goods sold = Sales - Gross profit =$8,200,000-8,200,000*20%  = $6,560,000

Q: On March 1, AYE Merchandising had an inventory of P560,000 in its retail store. Purchases made in…

A: The merchandise loss can be incurred due to fire or theft, etc. This loss can be estimated with the…

Q: On April 15 of the current year, a fire destroyed the entire uninsüred are available: Sales, January…

A: Solution: Option(a) . 120,000 is the correct answer. The amount of inventory loss estimated…

Q: On September 22, 2021, a flood destroyed the entire merchandise inventory on hand in a warehouse…

A: Cost of Goods sold = Net sales - Gross profir = $550,000 - $550,000*25% = $412,500

Q: Eastman Company lost most of its inventory in a fire in December just before the year-end physical…

A: Net Purchases = Purchases for the year - Purchase returns = $290,000 - $28,000 = $262,000 Net sales…

Q: A fire on 28th Feb destroyed some of a company’s inventory and its  inventory records. The following…

A: Inventory is the value of goods manufactured, purchased or traded by the company.

Q: Marigold Inc.’s April 30 inventory was destroyed by the explosion of an underground oil tank.…

A: Gross Profit is profit earned on selling the goods, which is calculated by deducting Cost of goods…

Q: The home office consistently bills its branch for shipments at 120% of cost. On September 21, 2021,…

A: Whenever head office sells goods to its branch it will add certain markup on cost price. Such markup…

Q: The Sahara Company's inventory was partially destroyed on June 4, 2016, when its warehouse caught on…

A: The gross profit method computes inventory value by attempting to apply the firm's future…

Q: Marigold Corporation's April 30 inventory was destroyed by fire. January 1 inventory was $164,900,…

A: The inventory valuation method used to evaluate the closing inventory and cost of goods sold. In…

Q: Adams Corporation estimates that it lost $75,000 in inventory from a recent flood. The following…

A: Ratio analysis is a method of measuring the financial position of the organization with different…

Q: A fire destroyed a warehouse of the Goren Group, Inc., on May 4, 2016. Accounting records on that…

A: Gross Profit Method: Under this method, the beginning inventory is added to the net purchases…

Q: A substantial portion of inventory owned by Prentiss Sporting Goods was recently destroyed when the…

A: Inventory means the stock of goods in which the businessmen deals. Cost of goods sold means the…

Q: On February 26, a hurricane destroyed the entire inventory stored in a warehouse owned by the…

A: The gross profit approach is a method of determining the volume of finishing inventory in a given…

Q: On September 22, 2021, a flood destroyed the entire merchandise inventory on hand in a warehouse…

A: Destroyed ending inventory can be calculated by deducting the estimated cost of goods sold from the…

Q: Swifty Corporation’s April 30 inventory was destroyed by fire. January 1 inventory was $159,400, and…

A: The cost of goods sold represents the total cost of the goods that are required in the production…

Q: For numbers 10-12: Layla Company reported that a flood recently destroyed many of the financial…

A: The question is related to Inventory valuation as the details regarding closing stock, Cost of goods…

Q: Company A reported that a flood recently destroyed many of their financial records. The entity used…

A: Ending inventory may be defined as the balance of inventory in the hands of company at the end of…

Q: Determine the inventory loss as a result of the fire, using the gross profit method. (Round answer…

A: Calculation of average Gross Profit Margin

Q: Blue Spruce Corporation's March 31 inventory was destroyed by fire. January 1 inventory was…

A: We assume that all the inventory of 31 March was destryed by the fire.

Q: On June 19, 20X0, a fire destroyed the entire uninsured merchandise inventory of the ABC…

A: Sales revenue is calculated as sum of cost of inventory and mark up value. Net sales is calculated…

Q: On April 10, 2022, fire damaged the office and warehouse of Sheffield Company. Most of the…

A: Cash sales / purchases are where cash is out-rightly paid or received  Credit sales / purchases on…

Q: Fosbre Corporation’s April 30 inventory was destroyed by fire. January 1 inventory was $150,000, and…

A: Step 1: Calculate the cost of goods sold.

Q: The inventory of Marshall's Merchandise Company was destroyed by fire on June 1. From an ex-…

A: Income statement: This statement shows the income earned and loss incurred by the organization in…

Q: On June 19, 20X0, a fire destroyed a fraction of the uninsured merchandise inventory of the ABC…

A:

Q: On June 30, a fire destroyed Intense Company's entire inventory. The inventory on January 1 totaled…

A: Cost of goods sold = P7800000 × 70%       =   P5460000

Q: Riverbed Inc.’s April 30 inventory was destroyed by the explosion of an underground oil tank.…

A: The ending inventory is the inventory that is left unsold in the business.

Q: The Star Company's inventory was partially destroyed on July 4, 2004, when its warehouse caught on…

A: The entity saved an inventory of $ 8500, which means the remaining inventory is destroyed by fire.…

Q: On 1st Jan 2006, a business had inventory of $19,000. During the month, sales totalled $32,500 and…

A: Here, we need to use the retail gross profit method to assess thr loss. This method is used by the…

Q: On September 22, 2018, a flood destroyed the entire merchandise inventory on hand in a warehouse…

A: Estimated gross profit = Net sales x Gross profit rate = $570,000 x 30% = $171,000

Q: On September 22, 2021, a flood destroyed the entire merchandise Inventory on hand in a warehouse…

A: Cost of goods sold = Sales Revenue - Gross Profit

Q: The Sahara Company's inventory was partially destroyed on June 4, 2016, when its warehouse caught on…

A: Purchase (1/1/16 through 6/3/16) = $190,000 Inventory (1/1/16)                          = $40,000…

Q: On August 31, a flood at Lordgin Company's only warehouse caused severe damage to its entire…

A: Solution: Gross profit for 8 months = Net sales * 25% = P5,200,000 * 25% = P1,300,000

Q: Over the past 3 years, the gross profit rate for Jini Company was 42%. Last week a fire destroyed…

A: Beginning inventory = $ 6350 Net purchases = $ 64700 Net sales at retail = $ 49700 Gross profit…

Q: .  Northstar Sales Corp. was organized on January 1, 2001. On December 31, 2002, the company lost…

A: In this case to compute the loss inventory due to fire by using the gross profit method. To…

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.