Question

During 2020, Sheffield Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Sheffield for a lump sum of $71,820 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 Type No. of Chairs Lounge chairs 480 $90 Armchairs 360 Straight chairs 840 During 2020, Sheffield sells 240 lounge chairs, 120 armchairs, and 144 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, eg. 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 $

Answer 1

Gross profit realizd during 2020	$ 14,208
Amount of inventory of unsold straight chairs	$ 21,924

Computations:  

a.

Type of Chair	Number of Chairs	Sales Price per Chair	Total Sales Price	Relative Sales Price	Total Cost	Cost Allocated	Cost per Chair
Lounge Chair	480	$ 90	$ 43,200	0.3789474	$ 71,820	$ 27,216	$ 56.70
Arm Chair	360	80	28,800	0.2526316	71,820	18,144	50.40
Straight Chair	840	50	42,000	0.3684211	71,820	26,460	31.50
			$ 114,000			$ 71,820

b.

Type of Chair	Number of Chairs Sold	Sales	Cost of Goods Sold	Gross Profit	Ending Inventory
Lounge Chair	240	$ 21,600	$ 13,608	$ 7,992	$ 13,608
Arm Chair	120	9,600	6,048	3,552	12,096
Straight Chair	144	7,200	4,536	2,664	21,924
		$ 38,400	$ 24,192	$ 14,208	$ 47,628