Eastman 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) $ 80,000 sales revenue $415,000 purchases 290,000 sales returns 21,000 purchase returns 28,000 gross profit % based on net selling price 35 % merchandise with a selling price of $30,000 remained undamaged after the fire, and damaged merchandise has a net realizable value of $8,150. the company does not carry fire insurance on its inventory. compute the amount of inventory fire loss. (do not use the retail inventory method.)

The amount of inventory fire loss $ 66,400.

Explanation:

To compute he amount of inventory fire loss we have to find cost of closing unit. Detail calculation is given below.

Add

Opening Stock                   $  80,000

Purchase                             $ 290,000

Sale Return (21,000*0.65)    $  13,650

Less

Sold (415,000 * 0.65)      $ 269,750

Purchase return               $  28,000

Total Closing (BAL)          $ 85,900

Undamage stock               ($ 19,500)                 (0.65 * 30,000)

Fire Loss                             $ 66,400

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