On oct 15, 2014 a fire destroyed all the stock of equipment of modern Equipment Center in its rented stockroom. The records of the firm show the following information
2020
2019
2018
2017
Sales
P925,000
P880,000
P790,000
P710,000
Cost of sales
758,500
739,200
679,400
624,800
Gross profit
P1,66,500
P140,000
P110,600
P85,200
Inventory January 1 2021
P130,500
Sales January 1 to October 15, 2021
960,000
Sales returns and allowances
15,000
Purchases January 1to October 15, 2021
890,000
Purchases returns and allowances
12,000
Cost of stock in display room not destroyed
85,000
How much is the estimated cost of merchandise lost in the fire of October 15, 2020?
P120,250
P148,600
P167,500
P252,500
asrrsa
To calculate the estimated cost of merchandise lost in the fire on October 15, 2020, you can use the following formula:
Estimated Cost of Lost Merchandise = Inventory at January 1, 2021 + Purchases from January 1 to October 15, 2021 - Cost of Stock in Display Room Not Destroyed - Sales from January 1 to October 15, 2021 + Sales Returns and Allowances - Purchases Returns and Allowances
Plugging in the given values, we have:
Estimated Cost of Lost Merchandise = P130,500 + P890,000 - P85,000 - P960,000 + P15,000 - P12,000
Estimated Cost of Lost Merchandise = P120,250
Therefore, the estimated cost of merchandise lost in the fire on October 15, 2020, is P120,250.
To determine the estimated cost of merchandise lost in the fire on October 15, 2020, we need to calculate the cost of ending inventory as of October 15, 2021.
First, let's find the cost of goods sold for January 1 to October 15, 2021:
Cost of goods sold = Purchases - Purchases returns and allowances
= P890,000 - P12,000
= P878,000
Next, let's calculate the cost of goods available for sale:
Cost of goods available for sale = Beginning Inventory + Purchases - Purchases returns and allowances + Cost of stock in display room not destroyed
= P130,500 + P890,000 - P12,000 + P85,000
= P1,093,500
Now, let's determine the ending inventory as of October 15, 2021:
Ending Inventory = Cost of goods available for sale - Cost of goods sold
= P1,093,500 - P878,000
= P215,500
Finally, the estimated cost of merchandise lost in the fire is the ending inventory as of October 15, 2021:
Estimated cost of merchandise lost = Ending Inventory
= P215,500
Therefore, the estimated cost of merchandise lost in the fire of October 15, 2020 is P215,500. None of the given options match this amount, so none of the provided choices are correct.