Question

On June 30, 2019, a fire completely destroyed the entire UFV facilities inventory warehouse. Luckily, the accountant had just taken the accounting records home so no accounting records were lost in the fire.   UFV wants to file an insurance claim as soon as possible for their lost inventory.

The accountant provides you with the following information:

             Purchases through June 30, 2019                             $870,500

             Net sales revenue through June 30, 2019               $1,361,700

                                                                                        

You also determine that the opening inventory for the period was $625,000 and you calculate that the gross margin % for UFV has historically been 54% of net sales revenue.

                                                                             

1) Estimate the value of inventory destroyed using the gross margin method.

QUESTION 4                                                                                                                                    

The following transactions affecting RRD’s petty cash fund.

RRD Products established the fund on April 2 with an initial deposit of $400. Cash for the deposit came from the owner.

April    7   Reimbursed $180 to the owner for postage expenses.

          12   Paid $175 for freight charges related to purchase of inventory from ABC Co. in Calgary.

         17   The owner withdrew $15 and used the cash for personal expenses.

         30   The petty cash custodian noted that there was $24 in cash left in the fund at month end.

          30   Finance Administrator went to the bank and received $450 to be used for petty cash

1) Prepare the journal entry on April 30 for all transactions. No accounting has been done to date on any of the above transactions, to this petty cash fund.

Answer 1

Thank you for your patience. Please give positive ratings so I can keep answering. It would help me a lot. Please comment if you have any query. Thanks!

UFV facilities
Calculation of inventory loss	Amount $	Amount $
Opening Inventory	625,000.00
Add: Purchases	870,500.00
Good available for sale		1,495,500.00
Net Sales	1,361,700.00
Gross profit @ 54%	735,318.00
Cost of good sold		626,382.00
Value of Inventory destroyed		869,118.00

RRD
Date	Account	Debit $	Credit $
2-Apr	Petty Cash	400.00
	Cash		400.00
7-Apr	Postage Expense	180.00
	Petty Cash		180.00
12-Apr	Freight Charges	175.00
	Petty Cash		175.00
17-Apr	Drawings	15.00
	Petty Cash		15.00
30-Apr	Shortage	6.00
	Petty Cash		6.00
30-Apr	Petty Cash	450.00
	Cash		450.00