Tim Legler requires an estimate of the cost of goods lost by fire on March 9. Me

Question

Tim Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $39,420. Purchases since January 1 were $93,830; freight-in, $4,100; purchase returns and allowances, $2,500. Sales are made at 33 1/3% above cost and totaled $131,400 to March 9. Goods costing $12,930 were left undamaged by the fire; remaining goods were destroyed.

(a) Compute the cost of goods destroyed.

(b) 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.)

$

Explanation / Answer

Ans 1 Mechandise on Hand      39,420.00 Add purchases      93,830.00 Add:Frieght        4,100.00 LessPurchase returns and allowanc       -2,500.00 Less Cost of Goods Sold( 100/133.33 of sales)    -98,550.00 Less Closing stock    -12,930.00 Good lost by Fire      23,370.00 Ans 2 Mechandise on Hand      39,420.00 Add purchases      93,830.00 Add:Frieght        4,100.00 LessPurchase returns and allowanc       -2,500.00 Less Cost of Goods Sold =2/3 of sales    -87,600.00 Less Closing stock    -12,930.00 Good lost by Fire      34,320.00

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