Estimating ending inventory

Nancy Corporation was founded on January 1, 2007. On December 31, 2008, the company lost most of its inventory in a warehouse fire just before the year-end count of inventory was to take place. Data from the records disclosed the following:



On January 1, 2005, Nancy's pricing policy was changed so that the gross profit rate would be 3 percentage points higher than the one earned in 2007.

Salvaged undamaged merchandise was marked to sell at $24,000, while damaged merchandise marked to sell at $16,000 had an estimated net realizable value of $3,600.

Determine the company's inventory loss due to the fire that occurred on December 31, 2008.

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