Franklin Company has experienced gross profit ratios for 2022, 2021, and 2020 of 33.00%, 29.25%, and 32.00%, respectively. On April 6, 2023, the firm's plant and all its inventory were destroyed by a tornado.
Accounting records for 2023, which were available because they were stored in a protected vault, showed the following:
Sales from January 1 through April 5 \$146,180
January 1 inventory amount \$63,310
Purchases of inventory from January 1 through April 5 \$118,823
Required:
Calculate the amount of the insurance claim to be filed for the inventory destroyed in the tornado. (Hint: Use the cost of goods sold model and a gross profit ratio that will result in the largest claim.)
Note: Do not round intermediate calculations.
Insurance claim
