Question

During 2020, Flounder Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Flounder for a lump sum of $77,805 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 520 $90 Armchairs 390 80 Straight chairs 910 During 2020, Flounder sells 260 lounge chairs, 130 armchairs, and 156 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 Amount of inventory of unsold straight chairs $

Answer 1

Answer:

	No of Chairs	Estimated Selling Price	Total Sales Price	Relative Sales Price	Total Cost	Cost Allocated to Chairs	Cost Per Chair
Lounge Chairs	520	90	46,800	37.89%	77,805	29,484	56.70
Arm Chairs	390	80	31,200	25.26%	77,805	19,656	50.40
Straight Chair	910	50	45,500	36.84%	77,805	28,665	31.50
			1,23,500
	Number of Chairs Sold	Cost Per Chair	Cost of Chairs Sold	Sales	Gross Profit
Lounge Chairs	260	56.7	14,742	23,400	8,658
Arm Chairs	130	50.4	6,552	10,400	3,848
Straight Chair	156	31.5	4,914	7,800	2,886
			26,208	41,600	15,392

Gross Profit Realized	$ 15,392
Amount of inventory of unsold straight chairs (910-156)*31.50	$ 23,751