CLASS QUESTIONS 9BMWF-1

# CLASS QUESTIONS 9BMWF-1 - percentage of sales price C.2C =...

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CLASS QUESTIONS (9B) (1) A fire destroyed the inventory of Olivera Company, but the accounting records were saved. The beginning inventory was \$22,000, purchases for the current period were \$71,000, and sales were \$140,000. Olivera’s customary gross margin is 45% of sales. Using the gross profit method , prepare an estimate of the amount of inventory destroyed by the fire. 22,000 + 71,000 = 93,000 (goods available at cost) 140,000*45% = 63,000 (gross profit) 140,000-63,000 = 77,000 (sales at cost) 93,000-77,000 = 16,000 (inventory destroyed) Check figure: \$16,000

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(2) If gross profit is given as 20% of cost, what is the gross profit percentage expressed as a
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Unformatted text preview: percentage of sales price? C+.2C = 140,000 1.2C = 140,000 C= 116,666.67 140,000-116,666.67 = 23333.33 23,333.33/140,000 = 16.67 Check figure: 16 2/3% (3) If gross profit is 33 1/3% of sales price, what is the gross profit percentage expressed as a percentage of cost? Cost + Gross profit = selling price C + 1/3 (140,000) = 140,000 C = 93,333.33 46,666.67/93,333.33 = .5 (4) A company has a markup of 25% based on cost. How much is gross profit as a percentage of sales? (5) What is the formula for the inventory turnover ratio ? COGS/ average inventory...
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CLASS QUESTIONS 9BMWF-1 - percentage of sales price C.2C =...

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