Gross Profit Method: Estimation of Flood Loss On November 21, 2019, a flood at Hodge Company's warehouse
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Gross Profit Method: Estimation of Flood Loss
On November 21, 2019, a flood 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 $10,700. The following information was available from Hodge's accounting records for Product Tex:
Inventory at November 1, 2019 | $100,000 | |
Purchases from November 1, 2019, to date of flood | 138,000 | |
Net sales from November 1, 2019, to date of flood | 210,000 |
Based on recent history, Hodge had a gross margin (profit) on Product Tex of 25% of net sales.
Related Book For
Intermediate Accounting
ISBN: 978-0078025839
9th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
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