Principles of Accounting
12th Edition
ISBN: 9781285607047
Author: NEEDLES
Publisher: Cengage Learning
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Chapter 7, Problem 5P
1.
To determine
Estimate the amount of the inventory lost in the fire.
2.
To determine
Identify the reasons for which the management of the company might need to estimate the amount of inventory.
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Brad Essary owned a small company that sold garden equipment. The equipment was expensive, and a perpetual system was
maintained for control purposes. Even so, lost, damaged, and stolen merchandise normally amounted to 5 percent of the inventory
balance. On June 14, Essary's warehouse was destroyed by fire. Just prior to the fire, the accounting records contained a $154,500
balance in the Inventory account. However, inventory costing $11,100 had been sold and delivered to customers but had not been
recorded in the books at the time of the fire. The fire did not affect the showroom, which contained inventory that cost $41,200.
Required
Estimate the amount of inventory destroyed by fire.
Inventory destroyed by 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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