Question

Exercise 9-15 Sunland Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $44,840. Purchases since January 1 were $84,960; freight-in, $4,012; purchase returns and allowances, $2,832. Sales are made at 33 1/3% above cost and totaled $138,000 to March 9. Goods costing $12,862 were left undamaged by the fire; remaining goods were destroyed. Compute the cost of goods destroyed. (Round gross profit percentage and final answer to 0 decimal places, e.g. 15% or 125.) Cost of goods destroyed LINK TO TEXT 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.) Cost of goods destroyed

Answer 1

a) Calculate cost of goods destroyed

Beginning inventory		44840
Purchase	84960
Less: Purchase return and allowance	-2832
Net purchase	82128
Add: Freight in	4012
Cost of purchase		86140
Cost of goods available for sale		130980
Less: Cost of goods sold (138000*100/133.33)		-103500
Ending inventory on the date of fire		27480
Less: Undamaged goods		-12862
Cost of goods destroyed		14618

b) Calculate cost of goods destroyed

Beginning inventory		44840
Purchase	84960
Less: Purchase return and allowance	-2832
Net purchase	82128
Add: Freight in	4012
Cost of purchase		86140
Cost of goods available for sale		130980
Less: Cost of goods sold (138000*2/3)		-92000
Ending inventory on the date of fire		38980
Less: Undamaged goods		-12862
Cost of goods destroyed		26118