Pharoah Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. Thecorporation's books disclosed the following.Beginning inventory$183,500Sales revenue$683,600Purchases for the year358,400Sales returns22,800Purchase returns30,000Rate of gross profit on net sales30 %Merchandise with a selling price of $23,100 remained undamaged after the fire. Damaged merchandise with an original selling price of$15,000 had a net realizable value of $5,800.Compute the amount of the loss as a result of the fire, assuming that the corporation had no insurance coverage.Amount of the loss$

The inventory that is sold or distributed and that has been purchased as finished goods or requires…

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Compute the amount of the loss as a result of the fire, assuming that the corporation had no insurance coverage.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter7: Inventories: Cost Measurement And Flow Assumptions

Section: Chapter Questions

Problem 3RE: Reid Company uses the periodic inventory system. On January 1, it had an inventory balance of...

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Question

Pharoah Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. The
corporation's books disclosed the following.
Beginning inventory
$183,500
Sales revenue
$683,600
Purchases for the year
358,400
Sales returns
22,800
Purchase returns
30,000
Rate of gross profit on net sales
30 %
Merchandise with a selling price of $23,100 remained undamaged after the fire. Damaged merchandise with an original selling price of
$15,000 had a net realizable value of $5,800.
Compute the amount of the loss as a result of the fire, assuming that the corporation had no insurance coverage.
Amount of the loss
$

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