On April 15, 2018, fire damaged the office and warehouse of Metlock Corporation The only accounting record saved was the general ledger, from which the balance sheet data below was prepared METLOCK CORPORATION MARCH 31, 2018 Cash $21,130 Accounts receivable 43,910 Inventory, December 31, 2017 69,020 Land 33,550 Buildings 110,370 Accumulated depreciation $40,189 Equipment 3,848 Accounts payable 24,887 Other accrued expenses 2,706 Common stock 99,400 Retained earnings 48,130 Sales revenue 140,050 Purchases 48,130 Miscellaneous expense 25,404 $355,362 $355,362 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 $13,410 $6,150 paid to accounts payable as of March 31, $3,595 for April merchandise shipments, and $4,219 paid for other expenses Deposits during the same period amounted to $12,374, which consisted of receipts on account from customers with the exception of a $937 refund from a vendor for merchandise returned in April 3 Correspondence with suppliers revealed unrecorded obligations at April 15 of $14,760 for April merchandise shipments, including $2,147 for shipments in transit (f o b shipping point) on that date 4 Customers acknowledged indebtedness of $42,090 at April 15, 2018 It was also estimated that customers owed another $7,330 that will never be acknowledged or recovered Of the acknowledged indebtedness, $546 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 $492,930 $366,110 Net purchases 259,130 248,030 Beginning inventory 47,600 63,260 Ending inventory 69,020 47,600 6 Inventory with a cost of $7,420 was salvaged and sold for $3,220 The balance of the inventory was a total loss Compute the amount of inventory fire loss (Round ratios for computational purposes to 2 decimal places, e g 78 52 and final answer to 0 decimal places, e g 28,987 ) Inventory fire loss $

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Aug 28, 2024

On April 15, 2018, fire damaged the office and warehouse of Metlock Corporation. The only accounting record saved was the general ledger, from which the

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

METLOCK CORPORATION MARCH 31, 2018
Cash	$21,130
Accounts receivable	43,910
Inventory, December 31, 2017	69,020
Land	33,550
Buildings	110,370
Accumulated depreciation		$40,189
Equipment	3,848
Accounts payable		24,887
Other accrued expenses		2,706
Common stock		99,400
Retained earnings		48,130
Sales revenue		140,050
Purchases	48,130
Miscellaneous expense	25,404
	$355,362	$355,362

The following data and information have been gathered.

The fiscal year of the corporation ends on December 31.

An examination of the April bank statement and canceled checks revealed that checks written during the period April 115 totaled $13,410: $6,150 paid to accounts payable as of March 31, $3,595 for April merchandise shipments, and $4,219 paid for other expenses. Deposits during the same period amounted to $12,374, which consisted of receipts on account from customers with the exception of a $937 refund from a vendor for merchandise returned in April.

Correspondence with suppliers revealed unrecorded obligations at April 15 of $14,760 for April merchandise shipments, including $2,147 for shipments in transit (f.o.b. shipping point) on that date.

Customers acknowledged indebtedness of $42,090 at April 15, 2018. It was also estimated that customers owed another $7,330 that will never be acknowledged or recovered. Of the acknowledged indebtedness, $546 will probably be uncollectible.

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	$492,930	$366,110
Net purchases	259,130	248,030
Beginning inventory	47,600	63,260
Ending inventory	69,020	47,600

Inventory with a cost of $7,420 was salvaged and sold for $3,220. The balance of the inventory was a total loss.

Compute the amount of inventory fire loss. (Round ratios for computational purposes to 2 decimal places, e.g 78.52% and final answer to 0 decimal places, e.g. 28,987.)

Inventory fire loss: