The Risky Company had suffered a huge storm and the inventory in its warehouse was destroyed...
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The Risky Company had suffered a huge storm and the inventory in its warehouse was destroyed by floodwaters the day before year-end. The accounting records show that the cost af merchandise on the first day of the year was $55,000. Records also show that Purchases were made during the year of $130,000. Soles for year to date are $190,000. Average markup on inventory is 50% Using this data for Risky and assuming the inventory was fully insured: Mutole Choice should only set up a receivable and record he reduction in inventory None of the other aternatives ere corect It should record a loss due to food, reduce its inventory and set up a recelvable trom the imuance company shoud record a loss due to food and record the reduction in inventory shoud continue to show the destroyed inventory on the balance sheet at its original cost since the insurance company will be replacing it The Risky Company had suffered a huge storm and the inventory in its warehouse was destroyed by floodwaters the day before year-end. The accounting records show that the cost af merchandise on the first day of the year was $55,000. Records also show that Purchases were made during the year of $130,000. Soles for year to date are $190,000. Average markup on inventory is 50% Using this data for Risky and assuming the inventory was fully insured: Mutole Choice should only set up a receivable and record he reduction in inventory None of the other aternatives ere corect It should record a loss due to food, reduce its inventory and set up a recelvable trom the imuance company shoud record a loss due to food and record the reduction in inventory shoud continue to show the destroyed inventory on the balance sheet at its original cost since the insurance company will be replacing it
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