Financial Accounting: Business Process Approach, Student Value Edition Plus New Mylab Accounting With Pearson Etext -- Access Card Package (3rd Edition)
3rd Edition
ISBN: 9780132962667
Author: Jane L. Reimers
Publisher: PEARSON
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Textbook Question
Chapter 5B, Problem 4EB
Estimate inventory. (LO 9). The records of Florida Tool Shop revealed the following information related to inventory destroyed in Hurricane Frances:
The company needs to file a claim for lost inventory with its insurance company. What is the estimated value of the lost inventory?
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What did i do wrong in my calculations?
On November 21, 2021, a fire at Hodge Company’s warehouse caused severe damage to its entire inventory of Product Tex. Hodge estimates that all usable damaged goods can be sold for $18,000. The following information was available from the records of Hodge’s periodic inventory system:
Inventory, November 1
$
130,000
Net purchases from November 1, to the date of the fire
146,000
Net sales from November 1, to the date of the fire
226,000
Based on recent history, Hodge’s gross profit ratio on Product Tex is 30% of net sales. Required:Calculate the estimated loss on the inventory from the fire, using the gross profit method. $134,200
After looking at the attachment below, if the physical ending inventory were valued at 325,000, how much is the estimated loss from inventory theft?
1. On which of the following instances is cost estimation not permitted?
A. Estimating the cost of inventory destroyed by fire or other natural calamities.
B. Presenting the value of inventory in an interim financial statement.
C. Reporting of inventory at the Statement of Financial Position at year-end.
D. Estimating the value of inventory missing because of theft.
2. Under the gross profit method, if the gross profit rate is based on cost, the cost of sales is computed as
A. Gross sales times cost ratio
B. Net sales divided by sales ratio
C. Net sales times cost ratio
D. Gross sales divided by sales ratio
3. In computing cost ratio, the conservative/conventional retail method should
A. Exclude mark-up but not markdown
B. Include mark-up and markdown
C. Exclude mark-up and markdown
D. Include mark-up but not markdown
Chapter 5B Solutions
Financial Accounting: Business Process Approach, Student Value Edition Plus New Mylab Accounting With Pearson Etext -- Access Card Package (3rd Edition)
Ch. 5B - Suppose Base Company began May with inventory of...Ch. 5B - Estimate inventory. (LO 9). Fantasy Games, Inc.,...Ch. 5B - (Estimate inventory. (LO 9). Knick-Knacks wants to...Ch. 5B - Estimate inventory. (LO 9). The following...Ch. 5B - Estimate inventory. (LO 9). The records of Florida...Ch. 5B - Estimate inventory. (LO 9). Hines Fruit Corp....Ch. 5B - Estimate inventory. (LO 9). Carries Cotton Candy...
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