Question: On October 1, 20x1, the warehouse of ABC Co. and all inventories contained therein were damaged by flood. Off-site back up of data base shows the following information:
Inventory, Jan. 1 10.000
Accounts payable, Jan. 1 3,000
Accounts payable, Sept. 30 2,000
Payments to suppliers 50,000
Freight-in 500
Purchase returns 500
Sales from Jan. to Sept. 80,000
Sales returns 5,000
Sales discounts 2,000
Gross profit rate based on sales 30%
Additional information: Goods in transit as of October 1, 20x1 amounted to 1,000, cost of goods out on consignment is 1,200, and materials damaged by flood can be sold at a salvage value of 1,800. How much is the inventory loss due to the flood?
a. 3,000
b. 2,500
c. 4,400
d. 4,900
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