Question

Sheridan Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $44,080. Purchases since January 1 were $83,520; freight-in, $3,944; purchase returns and allowances, $2,784. Sales are made at 33 1/3% above cost and totaled $135,000 to March 9. Goods costing $12,644 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 $ eTextbook and Media 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

Answer:-

a. Compute the cost of goods destroyed.

Particulars	Amount	Amount
Beginning inventory		$44,080
Purchase	$83,520
Freight in	$3,944
Less: purchase return and allowances	($2,784)
Net purchase		$84,680
Total cost of goods available for sale		$128,760
Sales	$135,000
Less: Gross profit ($135,000*25%)	($33750)
Cost of goods sold		(101,250)
Ending inventory		27,510
Less: Undamaged goods		($12,644)
Damage goods		$14,866

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

Particulars	Amount	Amount
Beginning inventory		$44,080
Purchase	$83,520
Freight in	$3,944
Less: purchase return and allowances	($2,784)
Net purchase		$84,680
Total cost of goods available for sale		$128,760
Sales	$135,000
Less: Gross profit ($135,000*33 1/3%)	($45,000)
Cost of goods sold		(90,000)
Ending inventory		$38,760
Less: Undamaged goods		($12,644)
Damage goods		$26,116

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