Question

On August 5, 2021, Crane Furniture shipped 70 dining sets on consignment to Furniture Outlet, Inc. The cost of each dining set was $340 each. The cost of shipping the dining sets amounted to $2500 and was paid for by Crane Furniture. On December 30, 2021, the consignee reported the sale of 40 dining sets at $840 each. The consignee remitted payment for the amount due after deducting a 5% commission, advertising expense of $590, and installation and setup costs of $770. The amount of cash received by Crane Furniture is:

a) 30,560

b) 31,330

c) 31,920

d) 27,060

Answer 1

Answer:

Amount of cash received   = Sales (-) Cost of Sales

Sales   = (Sales (-) Sales comission) x No. of units              = [$840 (-) ($840 x5%] x 40              = $798 x 40              = $31,920

Cost of Sales   = Advertising expense + Installation and setup costs                              =    $590 + $770                              =   $1,360

Amount of cash received    = Sales (-) Cost of Sales                                                        = $31,920 (-) $1,360                                                        = $30,560

Amount of cash received by crane Furniture   =   $30,560

From given options, option ( a ) is correct i.e., $30,560