Principles of Accounting
12th Edition
ISBN: 9781285607047
Author: NEEDLES
Publisher: Cengage Learning
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Chapter 7, Problem 10AP
Zubac Company is a large retail furniture company that operates in two adjacent warehouses. One warehouse is a showroom, and the other is used to store merchandise. On the night of April 22, 2014, a fire broke out in the storage warehouse and destroyed the merchandise stored there. Fortunately, the fire did not reach the showroom, so all the merchandise on display was saved.
Although the company maintained a perpetual inventory system, its records were rather haphazard, and the last reliable physical inventory had been taken on December 31. In addition, there was no control of the flow of goods between the showroom and the warehouse. Thus, it was impossible to tell what goods should have been in either place. As a result, the insurance company required an independent estimate of the amount of loss. The insurance company examiners were satisfied when they received the following information:
REQUIRED
- 1. Prepare a schedule that estimates the amount of the inventory lost in the fire.
- 2. ACCOUNTING CONNECTION ▶ What are some other reasons management might need to estimate the amount of inventory?
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The Sahara Company's inventory was partially destroyed on June 4, 2016, when its warehouse caught on fire early in the morning. Inventory that had a cost of $8,000 was saved. The accounting records, which were located in a fireproof vault, contained the following information:
Sales (1/1/16 through 6/3/16)
$260,000
Purchases (1/1/16 through 6/3/16)
190,000
Inventory (1/1/16)
40,000
Gross profit ratio
30% of cost
Using the gross profit method, what is the estimated cost of the inventory destroyed by the fire?
The Star Company's inventory was partially destroyed on July 4, 2004, when its warehouse caught on fire early in the morning. Inventory that had a cost of $8,500 was saved. The accounting records, which were located in a fireproof vault, contained the following information.
Sales (1/1/04 through 7/3/04)
$225,000
Purchases (1/1704 through 7/3/04)
180,000
Inventory (1/1/04)
45,000
Gross Profit Ratio
25% of cost
Using the gross profit method, what is the estimated cost of the inventory destroyed by the fire?
a. $17,500b. $25,000c. $30,000d. $36,500
At the end of the current period, a company checks its physical inventory against its records and discovers the following.
.
1,700 units (products) were in the warehouse.
. 23 of the 1,700 units in the warehouse were destroyed when a storage shelf collapsed.
. 180 units were loaded in a trailer. The units are to be delivered to a customer, terms FOB destination.
• 140 units were out on consignment to a retailer.
Determine the number of units in the company's period-end inventory.
Units in Ending Inventory
Units of Product in warehouse:
Add:
Less:
Total units in period-end inventory
1,700 units
units
Chapter 7 Solutions
Principles of Accounting
Ch. 7 - Prob. 1DQCh. 7 - Which of the following methods do not require a...Ch. 7 - Prob. 3DQCh. 7 - Prob. 4DQCh. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Prob. 7DQCh. 7 - Prob. 1SECh. 7 - Assume the following data with regard to inventory...Ch. 7 - Prob. 3SE
Ch. 7 - Prob. 4SECh. 7 - Prob. 5SECh. 7 - Prob. 6SECh. 7 - Prob. 7SECh. 7 - Prob. 8SECh. 7 - Prob. 9SECh. 7 - Prob. 10SECh. 7 - Prob. 11SECh. 7 - Prob. 12SECh. 7 - Prob. 1EACh. 7 - Prob. 2EACh. 7 - Prob. 3EACh. 7 - Prob. 4EACh. 7 - Prob. 5EACh. 7 - Prob. 6EACh. 7 - During July 2014, Micanopy, Inc., sold 500 units...Ch. 7 - Prob. 8EACh. 7 - Prob. 9EACh. 7 - Prob. 10EACh. 7 - Prob. 11EACh. 7 - Prob. 12EACh. 7 - Midori Company merchandises a single product...Ch. 7 - The inventory of Wood4Fun and data on purchases...Ch. 7 - Prob. 3PCh. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - Prob. 6APCh. 7 - DiPaolos inventory, purchases, and sales for March...Ch. 7 - Prob. 8APCh. 7 - Prob. 9APCh. 7 - Zubac Company is a large retail furniture company...Ch. 7 - Prob. 1CCh. 7 - Prob. 2CCh. 7 - ExxonMobil Corporation had net income of 41.0...Ch. 7 - Prob. 4CCh. 7 - JCPenney, a large retail company with many stores,...
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