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Gross Profit Method with fire loss?
(Gross Profit Method)
Castlevania 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 $170,000 Sales $650,000 Purchases for the year 450,000 Sales returns 24,000 Purchase returns 30,000 Rate of gross margin 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 $15,000 had a net realizable value (after the fire) of $5,300. Compute the amount of the loss as a result of the fire, assuming that the corporation had no insurance coverage. Fire loss on inventory $ ? |
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