State-Of-The-Art Inc

Essay

State-of-the-Art Inc. uses a perpetual inventory system. A fire damaged certain merchandise that had a sale price of $10,000 and cost $4,000. The insurance company agreed to pay $1,000 for the damage and let the company keep the merchandise. The company estimated that the goods can be sold for $3,800 and that $600 will be spent to clean and sell the damage goods. Give the entry to record the fire damage, including the receivable from the insurance company.