Question

Blossom Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $39,520. Purchases since January 1 were $74,880; freight-in, $3,536; purchase returns and allowances, $2,496. Sales are made at 331/3% above cost and totaled $117,000 to March 9. Goods costing $11,336 were left undamaged by the fire; remaining goods were destroyed Compute the cost of goods destroyed. (Round gross profit percentage and final answer to O decimal places, e.g. 15% or 125.) $ Cost of goods destroyed Compute the cost of goods destroyed, assuming that the gross profit is 331/3% 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

Answer 1

1. Cost of goods destroyed = beginning balance + net purchase + freight in - cost of goods sold - undamaged goods

= 39520+(74880-2496)+3536 - (117000/1.3333)-11336

= $16354

2. Cost of goods destroyed =

= 39520+(74880-2496)+3536-(117000*66.67%)-11336

= $26104