The Inventory of Willamette Company Was Destroyed by Fire on April

question 32

Essay

The inventory of Willamette Company was destroyed by fire on April 1. From an examination of the accounting records the following data for the first three months of the year are obtained: $$\begin{array} { l r } \text { Sales Revenue } & \$ 185,000 \\\text { Sales Returns and Allowances } & 5,000 \\\text { Purchases } & 110,000 \\\text { Freight-In } & 4,000 \\\text { Purchase Returns and Allowances } & 3,500\end{array}$$ Instructions
Determine the merchandise lost by fire assuming a beginning inventory of $50000 and a gross profit rate of 45% on net sales.

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Definitions:

Useful Life

It's the expected period over which an asset is considered usable and economically efficient for its intended purpose.

Revenue Expenditures

Outlays that are immediately charged against revenues in the period they occur, often related to the maintenance or repair of assets.

Accumulated Depreciation

Represents the total depreciation expense allocated to a tangible asset since it was put into use, reducing its book value on the balance sheet.

Useful Life

The period during which an asset is expected to be usable for its intended purpose, important for depreciation calculations.