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On June 302016 a flash flood damaged the warehouse and factoryof Padway Corporation completely destroying the workinprocessinventory There was no damage to either the raw materials orfinished

On June 30,2016, a flash flood damaged the warehouse and factoryof Padway Corporation, completely destroying the work-in-processinventory. There was no damage to either the raw materials orfinished goods inventories. A physical inventory taken after theflood revealed the following valuations:

RawMaterials                $62,000

Work inprocess              $0

FinishedGoods               $119,000

The inventory on January 1,2016 consisited of the following:

Rawmaterials                $30,000

Work inprocess              $100,000

FinishedGoods               $140,000

Total                               $270,000

A review of the books and records disclosed that the grossprofit margin historically approximated 25% of sales. The sales forthe first six months of 2016 were $340,000. Raw material purchaseswere $115,000. Direct Labor costs for this period were $80,000, andmanufacturing overhead was historically applied at 50% of directlabor.

Required:

Compute the value of the work-in-process inventory lostat June 30,2016. Show supporting computations in goodform.

 

Mar 22 2020 View more View Less

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