CHAPTER 9 INVENTORY QUESTIONS SOLUTIONS

# CHAPTER 9 INVENTORY - CHAPTER 9 INVENTORY QUESTIONS WITH SOLUTIONS 1 Tim McInnes requires an estimate of cost of goods sold lost by fire on April 2

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CHAPTER 9 INVENTORY QUESTIONS WITH SOLUTIONS 1. Tim McInnes requires an estimate of cost of goods sold lost by fire on April 2. Merchandise on hand January 1, was \$ 38,000. Purchases since January 1 were \$ 72,000; freight-in \$ 3,400 and purchase returns and allowances \$ 2,400. Sales totaled \$ 100,000 to April 2. Goods costing \$ 7,700 were left undamaged by the fire; all other goods were destroyed. a. Compute the cost of goods destroyed, assuming that the gross profit is 25% of cost. Gross profit is 25% of cost, thus gross profit = 25% / (100% + 25%) = 20% of sales Net sales \$ 100,000 Gross profit% 20% Estimated gross profit \$ 20,000 Net sales \$ 100,000 Less estimated COGS \$ 80,000 Estimated gross profit \$ 20,000 Merchandise on Hand, Jan. 1 \$ 38,000 Purchases \$ 72,000 Purchase returns ( \$ 2,400) Net Purchases \$ 69,600 Freight in 3,400 \$ 73,000 Available for sale \$ 111,000 Less: Estimated cost of goods sold \$ 80,000 Estimated ending inventory on April 2 \$ 31,000 Undamaged goods \$ 7,700

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## This note was uploaded on 12/03/2009 for the course ACG 3131 taught by Professor Rotella during the Spring '08 term at University of Central Florida.

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CHAPTER 9 INVENTORY - CHAPTER 9 INVENTORY QUESTIONS WITH SOLUTIONS 1 Tim McInnes requires an estimate of cost of goods sold lost by fire on April 2

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