Tim Legler requires an estimate of the cost of goods lost by fire on March 9. Me
ID: 2499168 • Letter: T
Question
Tim Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $39,420. Purchases since January 1 were $93,830; freight-in, $4,100; purchase returns and allowances, $2,500. Sales are made at 33 1/3% above cost and totaled $131,400 to March 9. Goods costing $12,930 were left undamaged by the fire; remaining goods were destroyed.
(a) Compute the cost of goods destroyed.
(b) Compute the cost of goods destroyed, assuming that the gross profit is 33 1/3% of sales. (Round ratios for computational purposes to 5 decimal places, e.g. 78.72345% and final answer to 0 decimal places, e.g. 28,987.)
$
Explanation / Answer
Ans 1 Mechandise on Hand 39,420.00 Add purchases 93,830.00 Add:Frieght 4,100.00 LessPurchase returns and allowanc -2,500.00 Less Cost of Goods Sold( 100/133.33 of sales) -98,550.00 Less Closing stock -12,930.00 Good lost by Fire 23,370.00 Ans 2 Mechandise on Hand 39,420.00 Add purchases 93,830.00 Add:Frieght 4,100.00 LessPurchase returns and allowanc -2,500.00 Less Cost of Goods Sold =2/3 of sales -87,600.00 Less Closing stock -12,930.00 Good lost by Fire 34,320.00