Problem 9-4

Eastman Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. Corporate records disclose the following.

Inventory (beginning)		$ 83,500		Sales revenue		$432,200
Purchases		359,300		Sales returns		22,300
Purchase returns		35,400		Gross profit % based on net selling price		36	%

Merchandise with a selling price of $35,900 remained undamaged after the fire, and damaged merchandise has a net realizable value of $8,840. The company does not carry fire insurance on its inventory. Compute the amount of inventory fire loss. (Do not use the retail inventory method.)