On May 17, It Was Discovered That a Material Amount

question 51

Essay

On May 17, it was discovered that a material amount of inventory had been stolen. A physical count discloses that $55,000 of merchandise was on hand as of May 17. The following additional data is available from the accounting records:

Records indicate that the company's gross profit has averaged 40 percent of selling prices.
Required:
Estimate the amount of loss due to theft.

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Definitions:

Section 402A

A legal provision defining the manufacturer's liability for defective goods that cause harm, even if all possible care was exercised during production.

Restatements (Second) of Torts

A set of treatises or legal reference books that summarize the general common law principles in the United States regarding torts, explicitly presenting the second revision of these principles.

Disclaimer of Liability

A statement that aims to limit one's responsibility for any harm or damages incurred by others as a result of using provided services or products.

Express Warranty

An explicit promise or guarantee about the quality or nature of a product, made by a seller to induce the buyer to purchase.