U o 763,1 Question 1: (20 points) When the old lady Mrs. Louisiana arrived at her old but very cute store on the beautiful spring morning of April 17, 2016, she found empty shelves and display racks, thieves had broken in during the night and stolen the entire inventory. Fortunately, she had insured the inventory and paid the premiums promptly. She immediately called the police and then her insurance company. A representative from the insurance company arrived at the store in half an hour. He politely forwarded some necessary questions and asked the old lady to calm down. He mentioned that as soon as she presents the data about the ending inventory of merchandise, the insurance company is ready for covering the loss due to theft. Mrs. Louisiana employed periodic inventory valuation in her store. She had to count her inventory in order to present any data. However the inventory was stolen and, it was impossible to count the inventory. She called her grandchildren in order to help her valuing the stolen inventory. Her grandchildren asked you to estimate the value of inventory stolen because you took financial accounting in the university. Mrs. Louisiana presented you the following data. Data Source of Data Value (5) Income Statement for the Year Ended Invoice Opening Trial Balance Relevant Date for the Data 2015 January 5, 2016 January 1, 2016 153,500 33.150 35,800 Net Sales Purchases Beginning Merchandise Inventory Cost of Goods Sold Purchase Discounts Net Sales Purchases Transportation-in Cost of Goods Sold Purchase Allowances Sales Net Sales Transportation-in Purchase Returns 122.800 3,150 141,200 71,750 2,250 112,960 1.750 15,000 103,600 2,750 Income Statement for the Year Ended Invoice Income Statement for the Year Ended Invoice Invoice Income Statement for the Year Ended Invoice Invoice Income Statement for the Year Ended Invoice Invoice Invoice Income Statement for the Year Ended Income Statement for the Year Ended Invoice Income Statement for the Year Ended Income Statement for the Year Ended Income Statement for the Year Ended Invoice Invoice Invoice 2015 January 5, 2016 2014 March 6, 2016 January 5, 2016 2014 March 6, 2016 January 15, 2016 2013 March 6, 2016 March 6, 2016 April 5, 2016 2013 2012 April 5, 2016 2012 2011 2011 March 10, 2016 April 1, 2016 March 10, 2016 Sales Cost of Goods Sold Net Sales Sales Allowances Cost of Goods Sold Net Sales Cost of Goods Sold Sales Sales Sales Discounts 5.150 47,500 82,880 97,220 1,200 77,776 104,800 83,840 25,000 38,000 2,500 Required: You are required to calculate the value of the stolen inventory using Gross Margin Method. (Hint: Calculate historical gross profit margin first.) U o 763,1 Question 1: (20 points) When the old lady Mrs. Louisiana arrived at her old but very cute store on the beautiful spring morning of April 17, 2016, she found empty shelves and display racks, thieves had broken in during the night and stolen the entire inventory. Fortunately, she had insured the inventory and paid the premiums promptly. She immediately called the police and then her insurance company. A representative from the insurance company arrived at the store in half an hour. He politely forwarded some necessary questions and asked the old lady to calm down. He mentioned that as soon as she presents the data about the ending inventory of merchandise, the insurance company is ready for covering the loss due to theft. Mrs. Louisiana employed periodic inventory valuation in her store. She had to count her inventory in order to present any data. However the inventory was stolen and, it was impossible to count the inventory. She called her grandchildren in order to help her valuing the stolen inventory. Her grandchildren asked you to estimate the value of inventory stolen because you took financial accounting in the university. Mrs. Louisiana presented you the following data. Data Source of Data Value (5) Income Statement for the Year Ended Invoice Opening Trial Balance Relevant Date for the Data 2015 January 5, 2016 January 1, 2016 153,500 33.150 35,800 Net Sales Purchases Beginning Merchandise Inventory Cost of Goods Sold Purchase Discounts Net Sales Purchases Transportation-in Cost of Goods Sold Purchase Allowances Sales Net Sales Transportation-in Purchase Returns 122.800 3,150 141,200 71,750 2,250 112,960 1.750 15,000 103,600 2,750 Income Statement for the Year Ended Invoice Income Statement for the Year Ended Invoice Invoice Income Statement for the Year Ended Invoice Invoice Income Statement for the Year Ended Invoice Invoice Invoice Income Statement for the Year Ended Income Statement for the Year Ended Invoice Income Statement for the Year Ended Income Statement for the Year Ended Income Statement for the Year Ended Invoice Invoice Invoice 2015 January 5, 2016 2014 March 6, 2016 January 5, 2016 2014 March 6, 2016 January 15, 2016 2013 March 6, 2016 March 6, 2016 April 5, 2016 2013 2012 April 5, 2016 2012 2011 2011 March 10, 2016 April 1, 2016 March 10, 2016 Sales Cost of Goods Sold Net Sales Sales Allowances Cost of Goods Sold Net Sales Cost of Goods Sold Sales Sales Sales Discounts 5.150 47,500 82,880 97,220 1,200 77,776 104,800 83,840 25,000 38,000 2,500 Required: You are required to calculate the value of the stolen inventory using Gross Margin Method. (Hint: Calculate historical gross profit margin first.)