Xiamen Inc. lost most of its inventory in a fire on Dec 28, just before the year-end physical inventory count was taken. Luckily, Xiamens accounting records were intact, and the company had fire insurance.

The companys books disclosed the following.

Beginning inventory $80,000 Sales $415,000

Purchases for the year 290,000 Sales returns 21,000

Purchase returns 28,000 Rate of gross margin on net sales 35%

Xiamen discovered that merchandise with a selling price of $3,000 remained undamaged after the fire.

Determine how much Xiamen may legitimately claim from the Insurance Company [2 marks].

No credit for answers submitted without plausible calculations

Consider using this table to organize your calculations

Beginning Inventory

Purchases

Purchase Returns

Goods Available for Sale at Cost

Sales

Sales Returns

Net Sales

Estimated Cost of Goods Sold

Answer: Xiamen may legitimately claim $