Exercise 9-10 During 2017, Bridgeport Furniture Company purchases a carload of w

Question

Exercise 9-10

During 2017, Bridgeport Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Bridgeport for a lump sum of $55,000 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.

Type

No. of Chairs

Estimated Selling
Price Each

During 2017, Bridgeport sells 200 lounge chairs, 100 armchairs, and 140 straight chairs.

What is the amount of gross profit realized during 2017? What is the amount of inventory of unsold straight chairs on December 31, 2017?

Type

No. of Chairs

Estimated Selling
Price Each

Lounge chairs 500 $90 Armchairs 400 80 Straight chairs 800 50

Explanation / Answer

a)Gross Profit : unit sold [price -cost]

          [200(90-42.308)]lounge + [100(80-37.6075)]arm +[140(50-23.50375)]

                 9538.4+ 4239.25+ 3709.475

           = $ 17487.125   [rounded to 17487.13]

b)amount of inventory of unsold straight chairs on December 31, 2017 = [800-140]*23.50375

              = $ 15512.475   [rounded to 15512.48]

Number of chairs value of chairs value assigned to individual chairs COST PER chair Lounge chairs 500 500*90= 45000 55000*45000/117000= 21154 21154/500 =$ 42.308 Armchairs 400 400*80=32000 55000*32000/117000= 15043 15043/400=$ 37.6075 straight chairs 800 800*50= 40000 55000*40000/117000= 18803 18803/800= 23.50375 117000

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