Problem 9-6

Blossom 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)		$ 81,000		Sales revenue		$407,900
Purchases		295,600		Sales returns		20,700
Purchase returns		27,900		Gross profit % based on net selling price		32	%

Merchandise with a selling price of $29,400 remained undamaged after the fire, and damaged merchandise has a net realizable value of $8,000. The company does not carry fire insurance on its inventory. Compute the amount of inventory fire loss. (Do not use the retail inventory method.)

Inventory fire loss