Financial Accounting
3rd Edition
ISBN: 9780133791129
Author: Jane L. Reimers
Publisher: Pearson Higher Ed
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Textbook Question
Chapter 5B, Problem 5PA
Estimate inventory. (LO 9). Hines Fruit Corp. sells fresh fruit to tourists on Interstate 75 in Florida. A tornado destroyed the entire inventory in late June. In order to File an insurance claim, Hazel and Gene, the owners of the company, must estimate the value of the lost inventory. Records from January 1 through the date of the tornado in June indicated that Hines Fruit Corp. started the year with $4,000 worth of inventory on hand. Purchases for the year amounted to $9,000, and sales up to the date of the tornado were $16,000. Gross profit percentage has traditionally been 30%.
Requirements
- 1. How much should Hazel and Gene request from the insurance company?
- 2. Suppose that one case of fruit was spared by the tornado. The cost of that case was $700. How much was the inventory loss under these conditions?
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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
Umatilla Bank and Trust is considering giving Pohl Company a loan. Before doingso, it decides that further discussions with Pohl’s accountant may be desirable. One areaof particular concern is the Inventory account, which has a year-end balance of $275,000.Discussions with the accountant reveal the following.
1. Pohl sold goods costing $55,000 to Hemlock Company FOB shipping point onDecember 28. The goods are not expected to reach Hemlock until January 12. Thegoods were not included in the physical inventory because they were not in thewarehouse.
2. The physical count of the inventory did not include goods costing $95,000 that wereshipped to Pohl FOB destination on December 27 and were still in transit at year-end.
3. Pohl received goods costing $25,000 on January 2. The goods were shipped FOB shipping point on December 26 by Yanice Co. The goods were not included in the physicalcount.
4. Pohl sold goods costing $51,000 to Ehler of Canada FOB destination on December 30.The goods were…
Umatilla Bank and Trust is considering giving Novak Corp. a loan. Before doing so, it decides that further discussions with Novak’s accountant may be desirable. One area of particular concern is the Inventory account, which has a year-end balance of $261,940. Discussions with the accountant reveal the following.
1.
Novak shipped goods costing $55,800 to Hemlock Company FOB shipping point on December 28. The goods are not expected to reach Hemlock until January 12. The goods were not included in the physical inventory because they were not in the warehouse.
2.
The physical count of the inventory did not include goods costing $97,720 that were shipped to Novak FOB destination on December 27 and were still in transit at year-end.
3.
Novak received goods costing $25,980 on January 2. The goods were shipped FOB shipping point on December 26 by Yanice Co. The goods were not included in the physical count.
4.
Novak shipped goods costing $54,080 to Ehler of Canada FOB…
Chapter 5B Solutions
Financial Accounting
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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