Question

During 2020, Sarasota Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Sarasota for a lump sum of $95,760 because it is discontinuing manufacturing operations and wishes to dispose of its entire stock. Three types of chairs are included in the carload. The three types and the estimated selling price for each are listed below. Estimated Selling Price Each Type No. of Chairs Lounge chairs 640 $90 Armchairs 480 Straight chairs 1,120 During 2020, Sarasota sells 320 lounge chairs, 160 armchairs, and 192 straight chairs. What is the amount of gross profit realized during 2020? What is the amount of inventory of unsold straight chairs on December 31, 2020? (Round cost per chair to 2 decimal places, e.g. 78.25 and final answer to O decimal places, eg. 5,845.) Gross profit realized during 2020 Amount of inventory of unsold straight chairs $

Answer 1

Gross profit realized during 2020 Amount of inventory of unsold straight chairs $ $ 18,944 29,232 Working Notes: Type Selling price per unit [B] $ 90 $ 80 $ No of Chairs [A] 640 4 80 1,120 Total Lounge chairs Armchairs Straight chairs Total Sales price [ A B ] $ 57,600 38,400 56,000 $ 152,000 Allocation | weight Cost price [C] [D] 0.378947368 $ 95,760 0.252631579 $ 95,760 0.368421053 $ 95,760 Cost allocted to chairs [E = CxD] $ 36,288 24,192 35,280 $ 95,760 Cost per chair [E/A] $ 56.70 $ 50.40 $ 31.50 1 [A] Number of chairs Cost of chairs sale price per Type sold cost per chair sold unit [B] [C=A B ] [D] Lounge chairs 320 56.70 $ 18,144 $ 90 Armchairs 160 $ 50.40 8,064 $ 80 Straight chairs 1925 31.50 6,048 $ 50 Total 32,256 Remaining inventory of unsold straight chairs Total Cost of Straight chairs 35,280 Less: Cost of goods sold of straight chairs (6,048) Amount of inventory of unsold straight chairs 29,232 Sales [E = AxD] $ 28,800 12,800 9,600 $ 51,200 Gross profit [E-C] $ 10,656 4,736 3,552 $ 18,944 Weight Calculation: Lounge chairs Armchairs Straight chairs (57,600 / 152,000) (38,400 / 152,000) (56,000 / 152,000) 0.378947368 0.252631579 0.368421053