Question

During 2020, Sarasota Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Sarasota for a lump sum of $131,670 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.

Type		No. of Chairs		Estimated Selling Price Each
Lounge chairs		880		$90
Armchairs		660		80
Straight chairs		1,540		50

During 2020, Sarasota sells 440 lounge chairs, 220 armchairs, and 264 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 0 decimal places, e.g. 5,845.)

Gross profit realized during 2020		$enter a dollar amount
Amount of inventory of unsold straight chairs		$enter a dollar amount

Answer 1

Type		No. of chairs (i)		Price per chair (ii)	Sales value (i) x (ii)	Sales value percentage
Lounge chairs		880		$90	79,200	79,200/209,000 = 37.89473684%
Armchairs		660		80	52,800	52,800/209,000 = 25.26315789%
Straight chairs		1,540		50	77,000	77,000/209,000 = 36.84210526%
Total					209,000

Type	Total cost	Cost per Chair
Lounge chairs	131,670 x 37.89473684% = 49,896	49,896/880 = 56.7
Armchairs	131,670 x 25.26315789 = 33,264	33,264/660 = 50.4
Straight chairs	131,670 x 36.84210526% = 48,510	48,510/1,540 = 31.5

Gross profit = Sales - Cost of goods sold

= (440 x 90 + 220 x 80 + 264 x 50) - (440 x 56.7 + 220 x 50.4 + 264 x 31.5)

= (39,600 + 17,600 + 13,200) - (24,948 + 11,088 + 8,316)

= 70,400 - 44,352

= $26,048

Ending inventory schedule

Type	Number of chairs (i)	Cost per chair (ii)	Total cost (i) x (ii)
Lounge chairs	440	56.7	24,948
Armchairs	440	50.4	22,176
Straight chairs	1,276	31.5	40,194
Total			87,318

Amount of inventory of unsold straight chairs on December 31, 2020 = $87,318

Kindly comment if you need further assistance. Thanks