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Wildhorse Legler requires an estimate of the cost of goods lost by fire on March 9....

Wildhorse Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $38,760. Purchases since January 1 were $73,440; freight-in, $3,468; purchase returns and allowances, $2,448. Sales are made at 33 1/3% above cost and totaled $114,000 to March 9. Goods costing $11,118 were left undamaged by the fire; remaining goods were destroyed.

(a)

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Compute the cost of goods destroyed. (Round gross profit percentage and final answer to 0 decimal places, e.g. 15% or 125.)
Cost of goods destroyed $

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Expert Solution

Particulars

Amount ($)

Gross Profit ratio = 25.00% [(33.33/133.33) x 100]

Beginning Inventory

          38,760

Add: Purchases

          73,440

Add: Freight Charges

            3,468

Less: purchase returns and allowances

           (2,448)

Cost of goods available for sales

         113,220

Less: Cost of goods sold [$114,000 x (1 - 0.25)]

         (85,500)

Less: Cost of goods left undamaged

         (11,118)

The cost of goods destroyed

         16,602

The Cost of goods destroyed will be 16,602

ekkarill92 answered 2 years ago
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