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question rasheed wallace company lost most of its inventory in a fire in december ju 4277098

Question

Rasheed Wallace Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. The corporation’s books disclosed the following.

Merchandise with a selling price of $23,530 remained undamaged after the fire. Damaged merchandise with an original selling price of $14,970 had a net realizable value of $7,000. Compute the amount of the loss as a result of the fire, assuming that the corporation had no insurance coverage.

Amount of the loss $___________

Beginning Inventory

170,100

Sales Revenue

6583,000

Purchases for the year

452,600

Sales returns

27,780

Purchase returns

31,000

Rate of gross profit on net sales

20%

 

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