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Unformatted text preview: back up our claim, and it will stand up in any court.” On April 3, just after the end of the first quarter, the company's finished goods storage area was swept by fire and all 8,000 unsold batteries were destroyed. (These batteries were part of the 40,000 units completed during the first quarter.) The company's insurance policy states that the company will be reimbursed for the “cost” of any finished batteries destroyed or stolen. Roger's brother-in-law has determined this cost as follows: Inventories at the beginning and end of the quarter were as follows: Required: 1. What conceptual errors, if any, were made in preparing the income statement above? 2. Prepare a schedule of cost of goods manufactured for the first quarter. 3. Prepare a corrected income statement for the first quarter. Your statement should show in detail how the cost of goods sold is computed. 4. Do you agree that the insurance company owes Solar Technology, Inc., $226,000? Explain your answer....
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- Spring '11
- Income Statement