Problem 9-07

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

FLOUNDER CORPORATION

MARCH 31, 2021

Cash

$19,290

Accounts receivable

41,550

Inventory, December 31, 2020

80,250

Land

36,030

Buildings

109,100

Accumulated depreciation

$43,528

Equipment

3,696

Accounts payable

25,166

Other accrued expenses

7,732

Common stock

108,800

Retained earnings

49,260

Sales revenue

130,800

Purchases

49,260

Miscellaneous expense

26,110

$365,286

$365,286

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 1-15 totaled $12,040: $5,867paid to accounts payable as of March 31, $3,490for April merchandise shipments, and $4,245paid for other expenses. Deposits during the same period amounted to $13,589, which consisted of receipts on account from customers with the exception of a $879refund from a vendor for merchandise returned in April.3.Correspondence with suppliers revealed unrecorded obligations at April 15 of $17,059for April merchandise shipments, including $2,276for shipments in transit (f.o.b. destination) on that date.4.Customers acknowledged indebtedness of $41,450at April 15, 2021. It was also estimated that customers owed another $8,160that will never be acknowledged or recovered. Of the acknowledged indebtedness, $639will 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:Year Ended

December 31

2020

2019

Net sales$527,330$409,060Net purchases266,250250,630Beginning inventory51,50060,710Ending inventory80,25051,5006.Inventory with a cost of $7,180was salvaged and sold for $3,350. 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$

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