90.2K

Verified Solution

Link Copied!

CHAPTERS 1) Western Design Co. is a large retail furniture company that operates in two adjacent warehouss One warehouse is a showroom, and the other is used to store merchandise. On the night'of February 20, 20x5, a fire broke out in the storage warehouse and destroyed the merchandise stored there. Fortunately, the fire did not reach the showroom, so all the merchandis on display was saved. Although the company maintained a perpetual inventory system, its records were rather haphazard, and the last reliable physical inventory had been taken on December 31, 20x4. In addition, there was no control of the flow of goods between the showroom and the warehouse. Thus,ft was impossible to tell which goods should have been in either place. As a result, the insurance company required an independent estimate of the amount of loss. The insurance company examiners were satisfied when they received the following information: Merchandise inventory, December 31, 20x4 Purchases, January 1 to February 20, 20x5 Purchase returns, January 1 to February 20, 20x5 Freight-in, January 1 to February 20, 20x5 Sales, January 1 to February 20, 20x5 Sales returns, January 1 to February 20, 20x5 Merchandise inventory in showroom on February 20, 20x5 Average gross margin $768,500 1,336,700 7,420 23,760 1,910,400 22,100 243,600 44% REQUIRED: Prepare a schedule that estimates the amount of inventory (at cost) lost in the fire

Answer & Explanation Solved by verified expert

See Answer