Gross Profit Method: Estimation of Flood Loss On June 30, 2019, a flash flood damaged the...

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Gross Profit Method: Estimation of Flood Loss On June 30, 2019, a flash flood damaged the warehouse and factory of Padway Corporation, completely destroying the work-in-process inventory. There was no damage. to either the raw materials or finished goods inventories. A physical inventory taken after the flood revealed the following valuations: Raw materials $62,000 Work in process 0 Finished goods 117,000 The inventory on January 1, 2019, consisted of the following: Raw materials Work in process Finished goods $30,000 100,000 150,000 $280,000 A review of the books and records disclosed that the gross profit margin historically approximated 25% of sales. The sales for the first six months of 2019 were $340,000. Raw material purchases were $115,000. Direct labor costs for this period were $60,000, and manufacturing overhead was historically applied at 50% of direct labor. Required: Compute the value of the work-in-process inventory lost at June 30, 2019. PADWAY CORPORATION Computation of Value of Work-in-Process Inventory Lost June 30, 2019 Sales Less: Gross profit Gross Profit Method: Estimation of Flood Loss On June 30, 2019, a flash flood damaged the warehouse and factory of Padway Corporation, completely destroying the work-in-process inventory. There was no damage. to either the raw materials or finished goods inventories. A physical inventory taken after the flood revealed the following valuations: Raw materials $62,000 Work in process 0 Finished goods 117,000 The inventory on January 1, 2019, consisted of the following: Raw materials Work in process Finished goods $30,000 100,000 150,000 $280,000 A review of the books and records disclosed that the gross profit margin historically approximated 25% of sales. The sales for the first six months of 2019 were $340,000. Raw material purchases were $115,000. Direct labor costs for this period were $60,000, and manufacturing overhead was historically applied at 50% of direct labor. Required: Compute the value of the work-in-process inventory lost at June 30, 2019. PADWAY CORPORATION Computation of Value of Work-in-Process Inventory Lost June 30, 2019 Sales Less: Gross profit