Stellar Lumber Company handles three principal lines of
merchandise with these varying rates of gross profit on
cost.
Lumber | 25% | |
Millwork | 30% | |
Hardware and fittings | 40% |
On August 18, a fire destroyed the office, lumber shed, and a
considerable portion of the lumber stacked in the yard. To file a
report of loss for insurance purposes, the company must know what
the inventories were immediately preceding the fire. No detail or
perpetual inventory records of any kind were maintained. The only
pertinent information you are able to obtain are the following
facts from the general ledger, which was kept in a fireproof vault
and thus escaped destruction.
Lumber |
Millwork |
Hardware |
||||
Inventory, Jan. 1, 2020 | $249,800 | $88,600 | $45,800 | |||
Purchases to Aug. 18, 2020 | 1,488,200 | 380,300 | 162,900 | |||
Sales to Aug. 18, 2020 | 2,055,600 | 494,000 | 211,400 |
Submit your estimate of the inventory amounts immediately preceding
the fire.
Particulars |
lumber | millwork | hardware |
opening stock | $249800 | $88600 | $45800 |
Add purchase | $1488200 | $380300 | $162900 |
Less cost of goods sold | ($1644480) | ($380000) | ($151000) |
Closing stock | $93520 | $88900 | $57700 |
Note calculation of cost of goods sold
Lumber = $2055600*100/125 = $1644480
Millwork = $494000*100/130 = $380000
Hardware = $211400*100/140 = $151000
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