On November 21, 2018, a fire at Hodge Company's warehouse caused severe damage to its entire inventory

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On November 21, 2018, a fire at Hodge Company's warehouse caused severe damage to its entire inventory of Product Tex. Hodge estimates that all usable damaged goods can be sold for $12,000. The following information was available from the records of Hodge's periodic inventory system:
Inventory, November 1 ........................................................... $100,000
Net purchases from November 1, to the date of the fire ..................... 140,000
Net sales from November 1, to the date of the fire ........................... 220,000
Based on recent history, Hodge's gross profit ratio on Product Tex is 35% of net sales.
Required:
Calculate the estimated loss on the inventory from the fire, using the gross profit method.
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Related Book For  book-img-for-question

Intermediate Accounting

ISBN: 9781259722660

9th Edition

Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas

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