Assignment $1$: Inventories$-$ Additional Valuation issues

ASSIGNMENT $1$: INVENTORIES $-$ ADDITIONAL VALUATION ISSUES

INTERMEDIATE ACCOUNTING I $($ACC$310)$

SEMESTER $1,2024-2025$

Timber Garments was founded in $2020$ with the mission to provide high$-$quality, sustainable, and stylish apparel to a growing market of environmentally conscious consumers. Specializing in eco$-$friendly and ethically sourced materials, Timber Garments quickly gained recognition for its commitment to quality and sustainability in fashion. The company's offerings include a range of garments such as organic cotton t$-$shirts, bamboo fabric casual wear, and recycled material outerwear, tailored to meet the needs of modern, eco$-$aware clientele.

Timber Garments Company handles three principal lines of merchandise i$.$e$.,$ Men, Women and Kid Section. Here is an overview of the gross profit calculations for each principal merchandise line at Timber Garments Company:

Men's Section:

Gross Profit Rate: $25\%$ on cost

Women's Section

Gross Profit Rate: $30\%$ on sales

Kids' Section

Gross Profit Rate: $40\%$ on cost

These varied gross profit rates across the sections help Timber Garments to cater to different market segments while optimizing profitability across each line of merchandise. In the face of rapid growth and expansion, Timber Garments has continued to uphold its dedication to ethical sourcing and environmental responsibility. However, on September $20,$ the business encountered a significant setback. A fire incident at its primary production facility caused substantial damage to its inventory, machinery, and production line, leading to considerable losses. Currently, Timber Garments is working closely with its insurance provider to claim the necessary funds for recovery. The company remains committed to restoring operations and, with its resilience, is looking forward to emerging stronger, continuing its journey to make sustainable fashion accessible to all.

To file a report of loss for insurance purposes, the company must know what the inventories were immediately preceding the fire. No detail or perpetual inventory records of any kind were maintained. The only pertinent information you are able to obtain is the following facts from the general ledger, which was kept in a fireproof vault and escaped destruction.On September $20,$ the company identified that a total inventory valued at $$20,000$ in the men's department $($inclusive of $$2,000$ of consigned goods$),$ $$18,500$ in the women's department, and $$5,800$ in the kids' section remained undamaged following a fire incident. It is important to note that the company's insurance policy exclusively covers goods owned by the company, and, therefore, only the inventory owned directly by the company is eligible for claim under the policy. The remaining goods, apart from those unaffected by the fire, were completely destroyed.

REQUIRED:

Calculate the total insurance claims applicable for each department based on the inventory owned by the company. Note that only goods directly owned by the company are eligible for claims under Timber's insurance policy.