Question

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

Answer 1

Compute inventory fire loss as follows

SC Inc
Inventory Fire Loss Computation
April 15, 2018
Particulars	Amount	Amount	Amount
Inventory, January 1, 2018			$80,260
Purchases from January 1 to March 31, 2018			$54,680
Cash paid for April merchandise shipments			$3,317
Purchases on account - Unrecorded at April 15, 2018			$17,062
Total			$155,319
Deduct: Merchandise in transit at April 15 , 2018		$2,355
Merchandise returned in April, 2018		$907	$3,262
Merchandise inventory available for sale			$152,057
Deduct: Estimated cost of sales:
Sales revenue during January 1 to March 31, 2018		$123,830
Sales revenue, April 1 to April 15, 2018:
Receivables acknowledged until April 15, 2018	$47,520
Receivables not acknowledged	$8,050
Total	$55,570
Add: Collections, April 1 to April 15, 2018 ($12,735 − $907)	$11,828
Total	$67,398
Deduct: Receivables, March 31, 2018	$38,970	$28,428
Total sales January 1 to April 15		$152,258
Deduct: Gross profit ($152,258 × 46.14%)		$70,252	$82,006
Estimated merchandise inventory			$70,051
Deduct: Sale value of salvaged inventory			$3,830
Inventory fire loss			$66,221

Note: Compute gross margin percentage as follows

Particulars	Amount	Amount
Net sales in 2016		$358,610
Net sales in 2017		$557,520
Total net sales		$916,130
Beginning inventory	$65,190
Net purchases in 2016	$243,670
Net purchases in 2017	$264,870
Total	$573,730
Deduct: Ending inventory	$80,260	$493,470
Gross profit		$422,660
Gross profit rate ($422,660 ÷ $916,130)	46.14%