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I don’t know how to tackle inventory loss.If you can answer the question below, i can manage doing the rest.
Question: A fire on 30 September 20X2 destroyed some of a company’s inventory and its inventory records.
inventory 1 September 20X2 – $ 318000
sales for September 20X2 – $612000
purchases for September 20X2 – $412000
inventory in good condition at 30 September 20X2 – $214000Standard gross profit percentage on sales is 25%
What is the value of the inventory loss?
Since the sales are 612000, the gross profit is 25% x 612000 = 153,000
Therefore the cost of sales = 612000 – 153000 = $459,000They had opening inventory of 318,000 and made purchases of 412,000, so they had 318000 + 412000 = 730,000 available for sale.
Since the cost of sales was 459,000 it means that the closing inventory should have been 730,000 – 459,000 = 271,000.
However, the actual closing inventory was only 214,000, so the difference if what was lost. The difference is 271000 – 214000 = $57,000
I hope that helps 🙂
Thanks a lot Sir, this was definitely helpful.i never thought loss of inventory was so simple to find.The question was not that tough as i thought but thanks to you now i know the way to tackle with it.
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