Zidek Corp. requires an estimate of the cost of goods lost by fire on March 9. M
ID: 2435006 • Letter: Z
Question
Zidek Corp. requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $38,000. Purchases since January 1 were $92,000; freight-in is $3,400; purchase returns and allowances is $2,400. Sales are made at 33 1/3% above cost and totaled $120,000 to March 9. Goods costing $10,900 were left undamaged by the fire; remaining goods were destroyed.a.) compute the cost of goods destroyed (round percentage of sales computation to 0 decimal places, e.g. 12 and answer to 0 decimal places, e.g. 25,250)
Cost of Goods Sold $_______________________________________
b.) compute the cost of goods destroyed, assuming that the gross profit is 33 1/3% of sales (do not round cost of goods sold percentage)
Cost of Goods Destroyed $ ___________________________________
Explanation / Answer
a.) compute the cost of goods destroyed (round percentage of sales computation to 0 decimal places, e.g. 12 and answer to 0 decimal places, e.g. 25,250) Sales are made at 33 1/3% above cost, which is equal to 25% of sales Sales $120,000 Less: Profit 25% $ 30,000 Cost of goods sold $ 90,000 Cost of Goods Sold $ 90,000_ b.) compute the cost of goods destroyed, assuming that the gross profit is 33 1/3% of sales (do not round cost of goods sold percentage) Merchandise on hand on January 1 was $38,000. Purchases since January 1 were $92,000; freight-in is $3,400; Total Material in inventory $133,400 Less: purchase returns and allowances is $2,400. Material available for sales $131,000 Less: Cost of goods sold $ 90,000 Goods available in stores $ 41,000 Less: Cost of Goods saved $ 10,900 Cost of goods destroyed $ 30,100 Cost of Goods Destroyed $ 30,100__
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