Reference no: EM132884069

Problem - Gross Profit Method: Estimation of Flood Loss - On June 30, 2019, a flash flood damaged the warehouse and factory of Padway Corporation, 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 $ 62,000

Work in process 0

Finished goods 119,000

The inventory on January 1, 2019, consisted of the following:

Raw materials $ 30,000

Work in process 100,000

Finished goods 140,000

$270,000

A review of the books and records disclosed that the gross profit margin historically approximated 25% of sales. The sales for the first six months of 2019 were $340,000. Raw material purchases were $115,000. Direct labor costs for this period were $80,000, and manufacturing overhead was historically applied at 50% of direct labor.

Required - What the value of the work-in-process inventory lost at June 30, 2019. Show supporting computations in good form.