Pharoah Legler requires an est
Pharoah Legler requires an estimate of the cost of goods lost byfire on March 9. Merchandise on hand on January 1 was $34,200.Purchases since January 1 were $64,800; freight-in, $3,060;purchase returns and allowances, $2,160. Sales are made at 33 1/3%above cost and totaled $99,000 to March 9. Goods costing $9,810were left undamaged by the fire; remaining goods weredestroyed.
Compute the cost of goods destroyed. (Round grossprofit percentage and final answer to 0 decimal places, e.g. 15% or125.)
| Cost of goods destroyed |
$ |
Compute the cost of goods destroyed, assuming that the grossprofit is 33 1/3% of sales.(Round ratios for computational purposes to 5 decimalplaces, e.g. 78.72345% and final answer to 0 decimal places, e.g.28,987.)
| Cost of goods destroyed |
$ |
Answer:
| 1 | |||
| Gross Profit ratio | 25.00% | =33.33333/133.33333 | |
| Beginning inventory | 34200 | ||
| Add: Purchases | 64800 | ||
| Add: Freight-in | 3060 | ||
| Less: Purchase returns and allowances | -2160 | ||
| Cost of goods available | 99900 | ||
| Sales revenue | 99000 | ||
| Less: Gross profit | 24750 | =99000*25% | |
| Cost of goods sold | 74250 | ||
| Estimated ending inventory | 25650 | ||
| Less: Goods on hand—undamaged (at cost) | 9810 | ||
| Cost of goods destroyed | 15840 | ||
| 2 | |||
| Gross Profit ratio | 33.33333% | ||
| Beginning inventory | 34200 | ||
| Add: Purchases | 64800 | ||
| Add: Freight-in | 3060 | ||
| Less: Purchase returns and allowances | -2160 | ||
| Cost of goods available | 99900 | ||
| Sales revenue | 99000 | ||
| Less: Gross profit | 33000 | =99000*33.33333% | |
| Cost of goods sold | 66000 | ||
| Estimated ending inventory | 33900 | ||
| Less: Goods on hand—undamaged (at cost) | 9810 | ||
| Cost of goods destroyed | 24090 |
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