ACC 577 OUTLET Learn by Doing/acc577outlet.com ACC 577 OUTLET Learn by Doing/acc577outlet.com | Page 34

and sales of $620,000 during the year. Its normal gross profit
percentage is 25%. It can sell some of its damaged inventory
for $5,000. The insurance company will reimburse Fireworks
for 70% of its loss. What amount should Fireworks report as
loss from the explosion?
Question 9
When the dollar-value LIFO (DV LIFO) retail method is used,
what is the first step in the calculation?
Question 10
Smith Co. has a checking account at Small Bank and an
interest-bearing savings account at Big Bank. On December 31,
year 1, the bank reconciliations for Smith are as follows: What
amount should be classified as cash on Smith's balance sheet at
December 31, year 1?
Question 11
At the end of the current year (calendar-fiscal year), a creditor
firm's 6% note receivable balance is $10,000. Two years
remain in the note term. Interest is due each December 31. The
debtor's financial position has deteriorated causing the
creditor to reevaluate the note. After careful consideration, the
creditor believes that only 60% of the principal ($10,000) will
be collected at the end of the term. The only interest expected
to be received is 2% of the original principal for one year, also
to be collected at the end of the term. At the end of the current
year, what amount of expense or loss is recognized by the