Question

Exercise 9-15 Oriole Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $33,440. Purchases since January 1 were $63,360; freight-in, $2,992; purchase returns and allowances, $2,112. Sales are made at 33 1/3% above cost and totaled $96,000 to March 9. Goods costing $9,592 were left undamaged by the fire; remaining goods were destroyed. Compute the cost of goods destroyed. (Round gross profit percentage and final answer to o decimal places, e.g. 15% or 125.) Cost of goods destroyed 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

Cost of goods destroyed = beginning inventory + purchase-purcahse return + freight in - cost of goods sold -undamaged goods

1. Cost of goods destroyed = $33440+63360-2112+2992- 96000/1.3333 - 9592

= $16088

2. Cost of goods destroyed = 33440+63360-2112+2992 - 96000*66.66% - 9592 = $24088