Question

During 2020, Pretenders Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Pretenders for a lump sum of $59,850 because it is discontinuing manufacturing operations and wishes to dispose of its entire stock. Three types of chairs are included in the carload. The three types and the estimated selling price for each are listed below. Type No. of Chairs Estimated Selling Price Each Lounge chairs 400 $90 Armchairs 300 80 Straight chairs 700 50 During 2020, Pretenders sells 200 lounge chairs, 100 armchairs, and 120 straight chairs. What is the amount of gross profit realized during 2020? What is the amount of inventory of unsold straight chairs on December 31, 2020? (Round cost per chair to 2 decimal places, e.g. 78.25 and final answer to 0 decimal places, e.g. 5,845.)

Gross profit realized during 2020		$enter a dollar amount
Amount of inventory of unsold straight chairs		$enter a dollar amount

Answer 1

Table--1
Type	No.of chairs	Estd. S.P.each	Total sale value	% of sale value to Total	Allocation of $ 59850 to each category	Purchase price/chair
1	2	3	4=2*3	5=4/95000	6=% in 5*59850	7=6/2
Lounge chairs	400	90	36000	37.89%	22680	56.7
Arm chairs	300	80	24000	25.26%	15120	50.4
Straight chairs	700	50	35000	36.84%	22050	31.5
TOTAL			95000	100.00%	59850

Sales units during 2020	S.P/chair	Total sale value	Purchase price/chair	Total cost	Gross profit
1	2	3=1*2	4=Col.7 Table 1	5=1*4	6=3-5
200	90	18000	56.7	11340	6660
100	80	8000	50.4	5040	2960
120	50	6000	31.5	3780	2220
Total		32000		20160	11840

1.Gross profit realised during 2020= 32000-20160

11840

(Answer)

2.Units of inventory of unsold straight chairs

700-120=

580

Amt.=580* $ 31.5=

18270

(Answer)