On November 21, 2016, a flood at Hodge Company's warehouse caused severe damage to its entire inventory of Product Tex. Hodge estimates that all usable damaged goods can be sold for $11,100. The following information was available from Hodge's accounting records for Product Tex:

Inventory at November 1, 2016		$111,000
Purchases from November 1, 2016, to date of flood		130,000
Net sales from November 1, 2016, to date of flood		229,000

Based on recent history, Hodge had a gross margin (profit) on Product Tex of 35% of net sales.

Required:

Question Content Area

1. Prepare a schedule to calculate the estimated loss on the inventory in the flood, using the gross profit method. On November 21, 2016, a flood at Hodge Company's warehouse caused severe damage to its entire inventory of Product Tex. Hodge estimates that all usable damaged goods can be sold for $11,100. The following information was available from Hodge's accounting records for Product Tex:

Inventory at November 1, 2016		$111,000
Purchases from November 1, 2016, to date of flood		130,000
Net sales from November 1, 2016, to date of flood		229,000

Based on recent history, Hodge had a gross margin (profit) on Product Tex of 35% of net sales.

Required:

Question Content Area

1. Prepare a schedule to calculate the estimated loss on the inventory in the flood, using the gross profit method. On November 21, 2016, a flood at Hodge Company's warehouse caused severe damage to its entire inventory of Product Tex. Hodge estimates that all usable damaged goods can be sold for $11,100. The following information was available from Hodge's accounting records for Product Tex:

Inventory at November 1, 2016		$111,000
Purchases from November 1, 2016, to date of flood		130,000
Net sales from November 1, 2016, to date of flood		229,000

Based on recent history, Hodge had a gross margin (profit) on Product Tex of 35% of net sales.

Required:

Question Content Area

1. Prepare a schedule to calculate the estimated loss on the inventory in the flood, using the gross profit method.