Question

Exercise 9-10 During 2020, Headland Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Headland for a lump sum of $149,625 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. Estimated Selling Price Each No. of Chairs $90 Type Lounge chairs Armchairs Straight chairs 1,000 750 1,750 80 50 During 2020, Headland sells 500 lounge chairs, 250 armchairs, and 300 straight chairs. What is the amount of gross profit realized during 2020? What is the amount of inventory of unsold straight chairs on December 31, 2020? (Round cost per chair to 2 decimal places, e.g. 78.25 and final answer to 0 decimal places, e.g. 5,845.) Gross profit realized during 2020 $ Amount of inventory of unsold straight chairs & Click if you would like to Show Work for this question: Open Show Work

Answer 1

Statement Showing Computation of Gross Profit to be Recognized
Type	Qty Sold (a)	Selling Price (b)	Cost per Chair (c )	Gross Profit per Chair (d=b-c)	Total Gross Profit to be recognzed (dXa)
Lounge chairs	500	$90.00	$56.70	$33.30	$16,650.00
Armchairs	250	$80.00	$50.40	$29.60	$7,400.00
Straight chairs	300	$50.00	$31.50	$18.50	$5,550.00
Total					$29,600.00

Computation of Amount of Unsold Inventory
Type	Total Chair Purchase	Qty Sold	Balance Inventory	Cost per Chair	Unsold Inventory
Lounge chairs	1000	500	320	$56.70	$18,144.00
Armchairs	750	250	340	$50.40	$17,136.00
Straight chairs	1750	300	1020	$31.50	$32,130.00
Total					$67,410.00

Type	No. of Chairs (a)	Selling Price (b)	Sales Value (c=a/b)	Sales Mix (d)	Lumpsump Cost (e )	Cost Allocated to each product (f=dXe)	Cost/ Chair (f/a)
Lounge chairs	1000	$90.00	$90,000.00	37.89%	$149,625.00	$56,700.00	$56.70
Armchairs	750	$80.00	$60,000.00	25.26%	$149,625.00	$37,800.00	$50.40
Straight chairs	1750	$50.00	$87,500.00	36.84%	$149,625.00	$55,125.00	$31.50
Total			$237,500.00			0