Headstrong Hardware lost most of its inventory in an electrical fire that destroyed the companys warehouse and
Question:
Headstrong’s insurance company requires Headstrong to prepare a reasonable estimate of the lost inventory before it can process the insurance claim.
You are Headstrong’s accountant. You review the accounting for 2015 and 2016 (to the date of the fire) and obtain the following information:
1. Sales in 2015 were $963,000.
2. Sales in 2016 up to the time of the fire amounted to $678,000.
3. Cost of goods sold in 2015 was $597,060.
4. 2016 inventory purchased to the date of the fire totalled $486,000.
5. The ending inventory reported on the 2015 statement of financial position was $88,000.
Required:
Prepare an estimate of the amount of inventory lost in the fire.
Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...
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Related Book For
Understanding Financial Accounting
ISBN: 978-1118849385
1st Canadian Edition
Authors: Christopher Burnley, Robert Hoskin, Maureen Fizzell, Donald
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