Question

Exercise 9-15 Pharoah Legler requires an estimate of the cost of goods lost by fire 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 $9,810 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 s LINK TO TEXT Compute the cost of goods destroyed, assuming that the gross profit is 33 -73% 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) calculate cost of goods destroyed

Beginning inventory		34200
Purchase	64800
Less: Purchase return and allowance	-2160
Net purchase	66960
Add: Freight in	3060
Cost of purchase		63900
Cost of goods available for sale		98100
Less: Cost of goods sold (99000*100/133.33)		-74250
Ending inventory at the date of fire		23850
Less; Undamaged goods		-9810
Cost of goods destoryed		14040

b) calculate cost of goods destroyed

Beginning inventory		34200
Purchase	64800
Less: Purchase return and allowance	-2160
Net purchase	66960
Add: Freight in	3060
Cost of purchase		63900
Cost of goods available for sale		98100
Less: Cost of goods sold (99000*66.67%)		-66000
Ending inventory at the date of fire		32100
Less; Undamaged goods		-9810
Cost of goods destoryed		22290