question archive On June 30, 2009, a flash flood damaged the warehouse and factory of Kim Company, completely destroying the work-in-process inventory
On June 30, 2009, a flash flood damaged the warehouse and factory of Kim Company, completely destroying the work-in-process inventory
Subject:AccountingPrice: Bought3
On June 30, 2009, a flash flood damaged the warehouse and factory of Kim Company,
completely destroying the work-in-process inventory. There was no damage to either the raw
materials or finished goods inventories. A physical inventory taken after the flood revealed the
following valuations:
Raw materials P1,200,000
Work-in-process -0-
Finished goods 3,000,000
The inventory on January 1, 2009 , consisted of the following:
Raw materials P 800,000
Work in process 3,000,000
Finished goods 3,680,000
A review of the books and records disclosed that the gross profit margin historically
approximated 30% of sales. The sales for the six months of 2009 were P8,400,000. Raw material
purchases were P2,800,000. Direct labor costs for this period were P1,900,000 and
manufacturing overhead has historically been applied at 52% of direct labor.
Instructions: Compute the value of the work-in-process inventory lost at June 30, 2009.
