Question

On May 3, 2020, Marin Company consigned 70 freezers, costing $450 each, to Remmers Company. The cost of shipping the freezers amounted to $890 and was paid by Marin Company. On December 30, 2020, a report was received from the consignee, indicating that 35 freezers had been sold for $740 each. Remittance was made by the consignee for the amount due after deducting a commission of 6%, advertising of $200, and total installation costs of $330 on the freezers sold. (Round answers to 0 decimal places, e.g. 5,275.) (a) Compute the inventory value of the units unsold in the hands of the consignee. Inventory value $ (b) Compute the profit for the consignor for the units sold. Profit on consignment sales $ (c) Compute the amount of cash that will be remitted by the consignee. Remittance from consignee $

Answer 1

(a) Inventory value of the units unsold

Inventory cost (70 * $450)	$31,500
(+) Freight	$890
Total inventory value	$32,390
Inventory value of units unsold ($32,390 / 2)	$16,195

(b) Compute the profit

Sales (35 * $740)	$25,900
(-) Cost of unit sold	($16,195)
(-) commission ($25,900 * 6%)	($1,554)
(-) advertising	($200)
(-) installation cost	($330)
Profit for the consignor	$7,621

(c)

Sales	$25,900
(-) commission	($1,554)
(-) advertising	($200)
(-) installation cost	($330)
Cash remitted	$23,816