PowerSwitch, Inc. designs and manufactures switches used in telecommunications. Serious flooding throughout North Carolina affected Power Switchs facilities. Inventory was completely ruined, and the companys computer system, including all accounting records, was destroyed.

Before the disaster recovery specialists clean the buildings, Stephen Plum, the company controller, is anxious to salvage whatever records he can to support an insurance claim for the destroyed inventory. He is standing in what is left of the accounting department with Paul Lopez, the cost accountant.

I didnt know mud could smell so bad, Paul says. What should I be looking for?

Dont worry about beginning inventory numbers, responds Stephen, well get them from last years annual report. We need first-quarter cost data.

I was working on the first-quarter results just before the storm hit, Paul says. Look, my report is still in my desk drawer. All I can make out is that for the first quarter, material purchases were $476,000 and direct labor, manufacturing overhead, and total manufacturing costs to account for were $505,000, $245,000, and $1,425,000, respectively. Wait! Cost of goods available for sale was $1,340,000.

Great, says Stephen. I remember that sales for the period were approximately

$1,700,000. Given our gross profit of 30%, thats all you should need.

Paul is not sure about that but decides to see what he can do with this information. The beginning inventory numbers were:

Raw Materials, $113,000

Work-in-Process, $229,000

Finished Goods, $154,000

Requirements

Prepare a schedule showing each inventory account and the increases and decreases to each account. Use it to determine the ending inventories of Raw Materials, Work-in-Process, and Finished Goods and then itemize a list of inventory lost.