Problem 9-7 On April 15, 2018, fire damaged the office and warehouse of Sandhill Corporation. The only accounting record saved was the general ledger, from which the balance sheet data below was prepared. $37,772 SANDHILL CORPORATION MARCH 31, 2018 Cash $21,480 Accounts receivable 38,970 Inventory, December 31, 2017 80,260 Land 37,230 Buildings 119,130 Accumulated depreciation Equipment 3,883 Accounts payable Other accrued expenses Common stock Retained earnings Sales revenue Purchases 54,680 Miscellaneous expense 28,707 $384,340 22,859 49,099 96,100 54,680 123,830 $384,340 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 $12,960: $5,744 paid to accounts payable as of March 31, $3,317 for April merchandise shipments, and $4,180 paid for other expenses. Deposits during the same period amounted to $12,735, which consisted of receipts on account from customers with the exception of a tozofsdfsdorforarbadiatodi Asil 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 $12,960: $5,744 paid to accounts payable as of March 31, $3,317 for April merchandise shipments, and $4,180 paid for other expenses. Deposits during the same period amounted to $12,735, which consisted of receipts on account from customers with the exception of a $907 refund from a vendor for merchandise returned in April. 3. Correspondence with suppliers revealed unrecorded obligations at April 15 of $17,062 for April merchandise shipments, including $2,355 for shipments in transit (f.o.b. shipping point) on that date. 4. Customers acknowledged indebtedness of $47,520 at April 15, 2018. It was also estimated that customers owed another $8,050 that will never be acknowledged or recovered. Of the acknowledged indebtedness, $589 will 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: Net sales Net purchases Beginning inventory Ending inventory Year Ended December 31 2017 2016 $557,520 $358,610 264,870 243,670 49,300 65,190 80,260 49,300 6. Inventory with a cost of $6,920 was salvaged and sold for $3,830. 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
