(Gross Profit Method) Eastman Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. Corporate records disclose the following.
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Inventory (beginning)
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$ 80,000
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Sales
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$415,000
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Purchases
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290,000
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Sales returns
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21,000
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Purchase returns
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28,000
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Gross profit % based on
net selling price
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35%
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|
|
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Merchandise with a selling price of $30,000 remained undamaged after the fire, and damaged merchandise has a salvage value of $8,150. The company does not carry fire insurance on its inventory.
Instructions
Prepare a formal labeled schedule computing the fire loss incurred. (Do not use the retail inventory method.)