Wallace Company lost of its inventory in a fire in December just before the year-end...
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Accounting
Wallace Company lost of its inventory in a fire in December just before the year-end physical inventory was taken. The corporation books disclosed the following;
Begininng inventory $170,000
Purchases for the year $390,000
Purchases returns $30,000
Sales revenue $650,000
Sales returns $24,000
Rate of gross profit on net sales 40%.
Merchandise with a selling price of $ 21,000 remained undamaged after the fire. Damaged merchandise with original selling price of $15,000 had a net realizable value of $5,300.
Compute the amount of the loss as a result of the fire, assuming that the corporation had no insurance coverage.
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