Exercise 9-16 Gheorghe Moresan Lumber Company handles three principal lines of m
ID: 2486820 • Letter: E
Question
Exercise 9-16 Gheorghe Moresan Lumber Company handles three principal lines of merchandise with these varying rates of gross profit on cost. Lumber 25% Millwork 30% Hardware and fittings 40% On August 18, a fire destroyed the office, lumber shed, and a considerable portion of the lumber stacked in the yard. To file a report of loss for insurance purposes, the company must know what the inventories were immediately preceding the fire. No detail or perpetual inventory records of any kind were maintained. The only pertinent information you are able to obtain are the following facts from the general ledger, which was kept in a fireproof vault and thus escaped destruction. Lumber Millwork Hardware Inventory, Jan. 1, 2014 $273,200 $93,960 $46,000 Purchases to Aug. 18, 2014 1,513,900 384,000 161,600 Sales to Aug. 18, 2014 2,057,100 557,440 265,720 Submit your estimate of the inventory amounts immediately preceding the fire. Lumber Millwork Hardware Inventory $ $ $
Explanation / Answer
Lumber
Millwork
Hardware
Gross profit
25%
30%
40%
Opening inventory
273,200
93,960
46,000
Purchases
1,513,900
384,000
161,600
Sales
2,057,100
557,440
265,720
Gross profit on sales
20%
23.076123%
28.5714285%
Gross profit
411,420
128,640
75,920
COGS
1,645,680
428,800
189,800
Ending inventory
141,420
49,160
17,800
Sales – Gross profit = COGS
Ending inventory = COGS – ( opening + purchases)
Lumber
Millwork
Hardware
Gross profit
25%
30%
40%
Opening inventory
273,200
93,960
46,000
Purchases
1,513,900
384,000
161,600
Sales
2,057,100
557,440
265,720
Gross profit on sales
20%
23.076123%
28.5714285%
Gross profit
411,420
128,640
75,920
COGS
1,645,680
428,800
189,800
Ending inventory
141,420
49,160
17,800
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.