Problem: Eastman Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. Corporate records disclose the following.
Inventory (beginning) $80,000
Purchase returns 28,000
Sales returns 21,000
Gross profit % based on net selling price 35%
Merchandise with a selling price of $30,000 remained undamaged after the fire, and damaged merchandise has a salvage value of $8,150. The company does not carry fire insurance on its inventory.
Prepare a formal labeled schedule computing the fire loss incurred. (Do not use the retail inventory method.)