Question

Exercise 9-15 Ivanhoe Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $32,680. Purchases since January 1 were $61,920; freight-in, $2,924; purchase returns and allowances, $2,064. Sales are made at 33 1/3% above cost and totaled $93,000 to March 9. Goods costing $9,374 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 O decimal places, e.g. 28,987.) Cost of goods destroyed

Answer 1

a. Compute the cost of goods destroyed.
Beginning inventory		32680
Purchase	61920
Freight in	2924
Less: purchase return and allowances	-2064
Net purchase		62780
Total cost of goods available for sale		95460
Sales	93000
Less: Gross profit	-23250
Cost of goods sold		-69750
Ending inventory		25710
Less: Undamaged goods		-9374
Cost of Damage goods		$ 16,336

b. Compute the cost of goods destroyed, assuming that the gross profit is 33 1/3% of sales.

Beginning inventory		32680
Purchase	61920
Freight in	2924
Less: purchase return and allowances	-2064
Net purchase		62780
Total cost of goods available for sale		95460
Sales	93000
Less: Gross profit	-31000
Cost of goods sold		-62000
Ending inventory		33460
Less: Undamaged goods		-9374
Cost of Damage goods		24086