Problem 9-7

On April 15, 2018, fire damaged the office and warehouse of Grouper Corporation. The only accounting record saved was the general ledger, from which the balance sheet data below was prepared.

GROUPER CORPORATION MARCH 31, 2018
Cash	$21,660
Accounts receivable	42,720
Inventory, December 31, 2017	68,450
Land	34,230
Buildings	99,060
Accumulated depreciation		$38,347
Equipment	3,539
Accounts payable		21,530
Other accrued expenses		2,944
Common stock		102,200
Retained earnings		48,650
Sales revenue		130,490
Purchases	48,650
Miscellaneous expense	25,852
	$344,161	$344,161

The following data and information have been gathered.

1.

The fiscal year of the corporation ends on December 31.

2.

An examination of the April bank statement and canceled checks revealed that checks written during the period April 115 totaled $13,800: $5,348 paid to accounts payable as of March 31, $3,261 for April merchandise shipments, and $3,863 paid for other expenses. Deposits during the same period amounted to $13,150, which consisted of receipts on account from customers with the exception of a $890 refund from a vendor for merchandise returned in April.

3.

Correspondence with suppliers revealed unrecorded obligations at April 15 of $15,162 for April merchandise shipments, including $2,240 for shipments in transit (f.o.b. shipping point) on that date.

4.

Customers acknowledged indebtedness of $44,510 at April 15, 2018. It was also estimated that customers owed another $8,320 that will never be acknowledged or recovered. Of the acknowledged indebtedness, $557 will probably be uncollectible.

5.

The companies insuring the inventory agreed that the corporations fire-loss claim should be based on the assumption that the overall gross profit rate for the past 2 years was in effect during the current year. The corporations audited financial statements disclosed this information:

		Year Ended December 31
		2017		2016
Net sales		$506,330		$354,540
Net purchases		275,270		225,420
Beginning inventory		55,000		67,400
Ending inventory		68,450		55,000

6.

Inventory with a cost of $6,960 was salvaged and sold for $3,520. The balance of the inventory was a total loss.

Inverntory fire loss?