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 $38,000. Purchases since January 1 were $72,000; freight-in, $3,400; purchase returns and allowances, $2,400. Sales are made at 33 ty3% above cost and totaled $100,000 to March 9. Goods costing $10,900 were left undamaged by the fire; remaining goods were destroyed. Compute the cost of goods destroyed. 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

Explanation / Answer

Cost of goods destroyed Opening Inventory 38000 Purchases 75400 ( Purchase+ Freight) Less: Purchase Returns -2400 73000 Sales 100000 Profit on sales 100000*25 25000 -75000 Less: Undamaged Goods -10900 Cost of goods damaged 25100 If Gross Profit is 331/3 of sales Opening Inventory 38000 Purchases 75400 ( Purchase+ Freight) Less: Purchase Returns -2400 73000 Sales 100000 Profit on sales 100000*33.33 33333.33 -66666.7 Less: Undamaged Goods -10900 Cost of goods damaged 33433.33

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