Question

On April 15, 2021, fire damaged the office and warehouse of Ayayai Corporation. The only accounting record saved was the general ledger, from which the balance sheet data below was prepared.

AYAYAI CORPORATION MARCH 31, 2021
Cash	$19,230
Accounts receivable	42,450
Inventory, December 31, 2020	72,170
Land	35,190
Buildings	113,870
Accumulated depreciation		$40,663
Equipment	3,260
Accounts payable		24,316
Other accrued expenses		5,952
Common stock		104,900
Retained earnings		54,140
Sales revenue		135,040
Purchases	54,140
Miscellaneous expense	24,701
	$365,011	$365,011

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 $13,490: $5,148 paid to accounts payable as of March 31, $3,264 for April merchandise shipments, and $3,859 paid for other expenses. Deposits during the same period amounted to $12,888, which consisted of receipts on account from customers with the exception of a $1,031 refund from a vendor for merchandise returned in April.
3.		Correspondence with suppliers revealed unrecorded obligations at April 15 of $15,220 for April merchandise shipments, including $2,198 for shipments in transit (f.o.b. destination) on that date.
4.		Customers acknowledged indebtedness of $49,170 at April 15, 2021. It was also estimated that customers owed another $7,760 that will never be acknowledged or recovered. Of the acknowledged indebtedness, $658 will probably be uncollectible.
5.		The companies insuring the inventory agreed that the corporation’s fire-loss claim should be based on the assumption that the overall gross profit rate for the past 2 years was in effect during the current year. The corporation’s audited financial statements disclosed this information:
		Year Ended December 31 2020 2019 Net sales $487,270 $416,570 Net purchases 278,140 232,620 Beginning inventory 51,200 64,120 Ending inventory 72,170 51,200
6.		Inventory with a cost of $7,470 was salvaged and sold for $3,720. The balance of the inventory was a total loss.

Compute the amount of inventory fire loss. (Round ratios for computational purposes to 2 decimal places, e.g 78.52% and final answer to 0 decimal places, e.g. 28,987.)

Inventory fire loss

Answer 1

OON Answer Page: N Inventory five love Total sales - 2019 net sales + 2020 net sales $416,670 + $ 484,270 $ 903,840 Beginning Proventory 2019 - $64.100 Pwoichases 2019 - 5032,620 Purchases 2020 $078,140 Ending inventory 2000 = $42,140 Cost of goods sold 64/20 +232620 +278140 -72170 $ 502, 710 Gross profit = 903,840 – 509,710 s $401,130 Gross profit percentage $401,130 44.38 %. $903,840 Estimated sales revenue = $ 135,040 Receivables not acknowledged - 67760 Receivable acknowledged – $49170 Collection from receivables = 12888-1031 = $11857 Accounts receivable X100 $ 42450

NO 3 Page: 1 Total sales 135,040 + 7760 +49140 + 11857 42450 $161377 Cook of goods sold - 161,347 44:38 V. X 161,377) = $161,347 - 471,619 $89758 Opening inventory, 2011 = $70170 Purchases $54,140 $ 3264 Shipment changes unrecorded obligations $15,220 Shipment in transit = $ 0198 Return of merchandize $1031 Merchandise available for sale 72170 +54140 +3264 + 15220 2198 -1031 $ 141,565 Estimated Pnventory = $141,565 – $89758 = $51807 Salvage value = 63720 Inventory fire lors 51807 – 3720 = $ 48087 2... Inventory fire lors - 448,087 =