On August 15, 2015, a hurricane damaged a warehouse of Rheinhart Merchandise Company. The entire inventory and
Question:
On August 15, 2015, a hurricane damaged a warehouse of Rheinhart Merchandise Company. The entire inventory and many accounting records stored in the warehouse were completely destroyed. Although the inventory was not insured, a portion could be sold for scrap. Through the use of the remaining records, the following data are assembled:
Inventory, January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 375,000
Purchases, January 1-August 15 . . . . . . . . . . . . . .... . . . . . . . . . . . . . . . . . . . . . . . . 1,385,000
Cash sales, January 1-August 15 . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . 225,000
Collection of accounts receivable, January 1-August 15 .. . . . . . . . . . . . . . . . . . . . 2,115,000
Accounts receivable, January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175,000
Accounts receivable, August 15 . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . 265,000
Salvage value of inventory . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . 5,000
Gross profit percentage on sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32%
Compute the inventory loss as a result of the hurricane.
Salvage ValueSalvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...
Step by Step Answer:
Estimated Sales January 1 to August 15 Credit sales Collection of ac...View the full answer
