[sibu]

Please assist me with the following questions:

Citi-Wholesalers marks its purchases up by 25%. Its inventory was insured against fire, the policy being subject to average.
A fire took place on 30th October 2007 and all inventory was destroyed except for items which had cost $40 000 which were salvaged in good condition.

The following information was obtained from the firm’s ledger:
Inventory (1st March 2007) $ 192 000
Purchases (1st March 2007 to 30th October 2007) $ 728 000
Sales (1st March 2007 to 30th October 2007) $ 960 000
The financial year ends on 28th February 2008.

Required:
4.1 Calculate the cost of inventory destroyed in the fire.
4.2 Calculate the amount to be claimed from the insurance company.

[ROLCAM]

1)

Opening Balance = $ 192,000
Add Purchases **= $ 728,000
___________________________
Sub Total *******=$ 920,000

Less COST OF SALES
75% of $ 960,000 = $ 720,000
__________________________

EST closing stock = $ 200,000

===========================

4.1 Calculate the cost of inventory destroyed in the fire.
ANSWER = $ 200,000 less $40,000 = $160,000
______________________________________

4.2 Calculate the amount to be claimed from the insurance company.
ANSWER = $ 200,000 less $40,000 = $160,000
______________________________________

[aki1973]

The Navarre Company had a fire on February 10,2011, that destroyed a major portion of its inventory. The salvaged accounting records contained the following information:
Sales January 1 to Feb 10 $701,200
Net merchandise purchased Jan. 1 to Feb. 10 364,800
Income statment:
Sales $6,400,450
Cost of goods sold $5,521,150
Balance sheet :
Merchandise invetory $588,200
Navarre was able to salvage inventory with a cost of $212,400
Estimating Ending Inventory
Gross Profit method