Compute the cost of goods destroyed

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Reference no: EM131772782

Part 1 Gross Profit Method

King Co.  requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $76,000. Purchases since January 1 were $144,000; freight-in, $6,800; purchase returns and allowances, $4,800. Sales are made at 25% above cost and totaled 200,000 to March 9. Goods costing $21,800 were left undamaged by the fire; remaining goods were destroyed.

Instructions

 

(a) Compute the cost of goods destroyed.

 

(b) Compute the cost of goods destroyed, assuming that the gross profit is 25% of sales.

 

Part 2 Retail Inventory Method

Presented below is information related to Greene Company.

 

Cost

Retail

Beginning Inventory

$50,000

$70,000

Purchases

343,750

535,000

Markups

 

 23,750

Markup cancellations

 

3,750

Markdowns

 

8,750

Markdown cancellations

 

1,250

Sales

 

550,000

 

 

 

Instructions - Compute the inventory by the conventional retail inventory method.

Reference no: EM131772782

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