Hello, Could someone help me solve question#5 here. Thank you! Required a. Determine the amount of inventory loss from the hurricane. b. Do you feel the insurance company’s approach is fair? Explain in detail with supporting calculations.
Michelle_Michy
attachment_31.docxChapter 9 Quiz
Due Date: Tuesday, November 16th
· Compute the amount of inventory fire loss
STANISLAW CORPORATION
Inventory Fire Loss Computation
April 15, 2018
Inventory, January 1, 2018 $ 75,000
Purchases from January 1 to March 31,2018 52,000
April merchandise shipments paid 3,400
Purchases on account-Unrecorded at April 15,2018 15,600
Total $ 146,000
Less: Merchandise in transit on April 15 $ 2,300
Merchandise returned 950 3,250
Merchandise available for sale $ 142,750
Less: Estimated cost of sales:
Sales revenue during January 1 to March 31,2018 135,000
Sales revenue, April 1 to April 15, 2018
Receivables acknowledged at 4/15/2018 $ 46,000
Receivables not acknowledged 8,000
Total 54,000
Add: Collections, April 1 to April 15, 2018
($12,950 - $950) 12,000
Total 66,000
Less: Receivables March 31, 2018 40,000 26,000
Total Sales January 1 to April 15 161,000
Less: Gross Profit ($161,000 x 45%) 72,450 88,550
Estimated merchandise inventory 54,200
Less: Sales value of salvaged inventory 3,500
Inventory Fire Loss $ 50,700
· Computation of Gross Profit Ratio
Net sales in 2016 $ 390,000
Net sales in 2017 530,000
Total net sales 920,000
Beginning inventory $ 66,000
Net purchases, 2016 235,000
Net purchases, 2017 280,000
Total 581,000
Less: Ending Inventory 75,000 506,000
Gross Profit $414,000
Gross Profit ratio ($414,000: 920,000 x 100) 45%
Thy Mai
ACCT 103
