Question

Oriole Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. The corporation’s books disclosed the following. Beginning inventory $173,200 Sales revenue $672,900 Purchases for the year 424,200 Sales returns 24,600 Purchase returns 28,000 Rate of gross profit on net sales 30 % Merchandise with a selling price of $21,000 remained undamaged after the fire. Damaged merchandise with an original selling price of $16,100 had a net realizable value of $5,700. Compute the amount of the loss as a result of the fire, assuming that the corporation had no insurance coverage.

Answer 1

Answer:$95,190

Explanation:. $

Opening stock. . 1 73,200

Add purchase less return

(424200-28,000). 396,200

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569400

Less cost of goods sold

Salers- return * 70/100

(672900-24600)*70/100=. (453,810)

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Stock balance. 115,590

Less stock salvage

21000*70/100 (14,700)

Damaged realisable value ( 5700)

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Stock damaged by fire

95,190