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AE9-16 - 561,782 258,230 Lumber Millwork Hardware...

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*AE9-16 Correct. (Gross Profit Method) Sliver Lumber Company handles three principal lines of merchandise with these varying rates of gross profit on cost.   Lumber 25%   Millwork 30%   Hardware and fittings 40% On August 18, a fire destroyed the office, lumber shed, and a considerable portion of the lumber stacked in the yard. To file a  report of loss for insurance purposes, the company must know what the inventories were immediately preceding the fire. No  detail or perpetual inventory records of any kind were maintained. The only pertinent information you are able to obtain are  the following facts from the general ledger, which was kept in a fireproof vault and thus escaped destruction.     Lumber Millwork Hardware   Inventory, Jan. 1, 2011 \$ 263,500   \$94,860   \$47,430     Purchases to Aug. 18, 2011 1,581,000   395,250   168,640     Sales to Aug. 18, 2011 2,160,700
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Unformatted text preview: 561,782 258,230 Lumber Millwork Hardware Inventory 1/1/11 (cost) \$263,500 \$94,860 \$47,430 Purchases to 8/18/11 (cost) 1,581,000 395,250 168,640 Cost of goods available 1,844,500 490,110 216,070 Deduct cost of goods sold 1,728,560 432,140 184,450 Inventory 8/18/11 \$115,940 \$57,970 \$31,620 Computation for cost of goods sold:* Lumber: \$2,160,700 = \$1,728,560 1.25 Millwork: \$561,782 = \$432,140 1.30 Hardware: \$258,230 = \$184,450 1.40 * Alternative computation for cost of goods sold: Markup on selling price: Cost of goods sold: Lumber: 25% = 20% or 1/5 \$2,160,700 × 80% = \$1,728,560 100% + 25% Millwork: 30% = 3/13 \$561,782 × 10/13 = \$432,140 100% + 30% Hardware:: 40% = 2/7 \$258,230 × 5/7 = \$184,450 100% + 40%...
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