On July 15, 2026, fire damaged the office and warehouse of Teal Corporation. The only accounting record saved was the general ledger, from which the following trial balance was prepared.
TEAL CORPORATION TRIAL BALANCE June 30, 2026 Cash $12,000 Accountsreceivable156,000 Inventory, December 31, 2025168,000 Land 70,900 Buildings Accumulated depreciation $54,500 Equipment 26,100 Accounts payable 151,100 Other accrued expenses 14,200 Common stock 11,000 Retained earnings 384,200 Sales revenue 695,800 Purchases 1. The fiscal year of the corporation ends on December 31 . 2. An examination of the July bank statement and canceled checks revealed that checks written during the period July 1-15 totaled $63,400 : $52,500 paid to accounts payable as of June 30,$2,700 for July merchandise shipments, and $4,000 paid for other expenses. Deposits during the same period amounted to $79,500, which consisted of receipts on account from customers with the exception of a $1,700 refund from a vendor for merchandise returned in July. 3. Correspondence with suppliers revealed unrecorded obligations at July 15 of $27,000 for July merchandise shipments, including $1,540 for shipments in transit (f.o.b. shipping point) on that date. 4. Customers acknowledged indebtedness of $155,000 at July 15,2026 . It was also estimated that customers owed another $11,800 that will never be acknowledged or recovered. Of the acknowledged indebtedness, $1,900 will probably be uncollectible. 5. The companies insuring the inventory agreed that the corporation's 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 corporation's audited financial statements disclosed this information: 6. Inventory with a cost of $10,400 was salvaged and sold for $3,000. The balance of the inventory was a total loss. Complete the schedule computing the gross profit and the schedule to determine the amount of inventory fire loss. (Round ratios for computational purposes to 0 decimal places, e.g 78% and final answer to 0 decimal places, e.g. 28,987 .) TEAL CORPORATION Computation of Inventory Fire Loss Inventory, 1/1/26 $ Purchases, 1/1/26-6/30/26 July merchandise shipments paid Unrecorded purchases on account Total Less: Shipments in transit $ Merchandise returned Merchandise available for sale Less estimated cost of sales: Sales, 1/1/26-6/30/26 Sales, 7/1/26-7/15/26 Receivables acknowledged at 7/15/26 $ Estimated receivables not acknowledged Total Add collections, 7/1/26-7/15/26 Total Less receivables, 6/30/26 Total sales 1/1/267/15/26 Less gross profit Cost of Goods Sold Estimated merchandise inventory Less: Sale of salvaged inventory Inventory fire loss Computation of Gross Profit Rate $ Beginning Inventory Cost of Goods Sold Ending Inventory Gross Profit Gross Profit Rate Net Purchases, 2024 Net Purchases, 2025 Net Sales, 2024 Net Sales, 2025 Total Total Net Sales TEAL CORPORATION TRIAL BALANCE June 30, 2026 Cash $12,000 Accountsreceivable156,000 Inventory, December 31, 2025168,000 Land 70,900 Buildings Accumulated depreciation $54,500 Equipment 26,100 Accounts payable 151,100 Other accrued expenses 14,200 Common stock 11,000 Retained earnings 384,200 Sales revenue 695,800 Purchases 1. The fiscal year of the corporation ends on December 31 . 2. An examination of the July bank statement and canceled checks revealed that checks written during the period July 1-15 totaled $63,400 : $52,500 paid to accounts payable as of June 30,$2,700 for July merchandise shipments, and $4,000 paid for other expenses. Deposits during the same period amounted to $79,500, which consisted of receipts on account from customers with the exception of a $1,700 refund from a vendor for merchandise returned in July. 3. Correspondence with suppliers revealed unrecorded obligations at July 15 of $27,000 for July merchandise shipments, including $1,540 for shipments in transit (f.o.b. shipping point) on that date. 4. Customers acknowledged indebtedness of $155,000 at July 15,2026 . It was also estimated that customers owed another $11,800 that will never be acknowledged or recovered. Of the acknowledged indebtedness, $1,900 will probably be uncollectible. 5. The companies insuring the inventory agreed that the corporation's 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 corporation's audited financial statements disclosed this information: 6. Inventory with a cost of $10,400 was salvaged and sold for $3,000. The balance of the inventory was a total loss. Complete the schedule computing the gross profit and the schedule to determine the amount of inventory fire loss. (Round ratios for computational purposes to 0 decimal places, e.g 78% and final answer to 0 decimal places, e.g. 28,987 .) TEAL CORPORATION Computation of Inventory Fire Loss Inventory, 1/1/26 $ Purchases, 1/1/26-6/30/26 July merchandise shipments paid Unrecorded purchases on account Total Less: Shipments in transit $ Merchandise returned Merchandise available for sale Less estimated cost of sales: Sales, 1/1/26-6/30/26 Sales, 7/1/26-7/15/26 Receivables acknowledged at 7/15/26 $ Estimated receivables not acknowledged Total Add collections, 7/1/26-7/15/26 Total Less receivables, 6/30/26 Total sales 1/1/267/15/26 Less gross profit Cost of Goods Sold Estimated merchandise inventory Less: Sale of salvaged inventory Inventory fire loss Computation of Gross Profit Rate $ Beginning Inventory Cost of Goods Sold Ending Inventory Gross Profit Gross Profit Rate Net Purchases, 2024 Net Purchases, 2025 Net Sales, 2024 Net Sales, 2025 Total Total Net Sales
