On April 15, 2021, fire damaged the office and warehouse of Whispering Corporation The only accounting record saved was the general ledger, from which the balance sheet data below was prepared WHISPERING CORPORATION MARCH 31, 2021 Cash $21,860 Accounts receivable 43,040 Inventory, December 31, 2020 77,390 Land 31,880 Buildings 118,120 Accumulated depreciation $37,414 Equipment 3,738 Accounts payable 22,698 Other accrued expenses 35,483 Common stock 90,800 Retained earnings 56,770 Sales revenue 134,410 Purchases 56,770 Miscellaneous expense 24,777 $377,575 $377,575 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 $11,960 $5,734 paid to accounts payable as of March 31, $3,585 for April merchandise shipments, and $3,546 paid for other expenses Deposits during the same period amounted to $13,442, which consisted of receipts on account from customers with the exception of a $859 refund from a vendor for merchandise returned in April 3 Correspondence with suppliers revealed unrecorded obligations at April 15 of $16,393 for April merchandise shipments, including $2,454 for shipments in transit (f o b destination) on that date 4 Customers acknowledged indebtedness of $44,440 at April 15, 2021 It was also estimated that customers owed another $7,790 that will never be acknowledged or recovered Of the acknowledged indebtedness, $578 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 2020 2019 Net sales $498,340 $392,400 Net purchases 283,010 256,220 Beginning inventory 50,000 64,990 Ending inventory 77,390 50,000 6 Inventory with a cost of $7,340 was salvaged and sold for $3,810 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 )

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

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 06, 2024

On April 15, 2021, fire damaged the office and warehouse of Whispering Corporation. The only accounting record saved was the general ledger, from which the

On April 15, 2021, fire damaged the office and warehouse of Whispering Corporation. The only accounting record saved was the general ledger, from which the balance sheet data below was prepared.

WHISPERING CORPORATION MARCH 31, 2021
Cash	$21,860
Accounts receivable	43,040
Inventory, December 31, 2020	77,390
Land	31,880
Buildings	118,120
Accumulated depreciation		$37,414
Equipment	3,738
Accounts payable		22,698
Other accrued expenses		35,483
Common stock		90,800
Retained earnings		56,770
Sales revenue		134,410
Purchases	56,770
Miscellaneous expense	24,777
	$377,575	$377,575

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 $11,960: $5,734 paid to accounts payable as of March 31, $3,585 for April merchandise shipments, and $3,546 paid for other expenses. Deposits during the same period amounted to $13,442, which consisted of receipts on account from customers with the exception of a $859 refund from a vendor for merchandise returned in April.

Correspondence with suppliers revealed unrecorded obligations at April 15 of $16,393 for April merchandise shipments, including $2,454 for shipments in transit (f.o.b. destination) on that date.

Customers acknowledged indebtedness of $44,440 at April 15, 2021. It was also estimated that customers owed another $7,790 that will never be acknowledged or recovered. Of the acknowledged indebtedness, $578 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
	2020	2019
Net sales	$498,340	$392,400
Net purchases	283,010	256,220
Beginning inventory	50,000	64,990
Ending inventory	77,390	50,000

Inventory with a cost of $7,340 was salvaged and sold for $3,810. 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.)