Question

During 2020, Skysong Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Skysong for a lump sum of $77,805 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		520		$90
Armchairs		390		80
Straight chairs		910		50

During 2020, Skysong sells 260 lounge chairs, 130 armchairs, and 156 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

Lumpsum consideration paid = $77,805
Allocation of Consideration
Type		Units	Selling price	Est. Sales	% of Total	Consideration	Allocated Consideration
Lounge chairs	520	90	46800	37.89%	77805		29484
Armchairs		390	80	31200	25.26%	77805		19656
Straight chairs	910	50	45500	36.84%	77805		28665
Total				123500	100.00%	77805		77805
Cost per unit
Type		Allocated Consideration	Units	Cost per unit
Lounge chairs	29484		520	56.7
Armchairs		19656		390	50.4
Straight chairs	28665		910	31.5
Total		77805
Ending inventory units
Type		Total Units	Sales units	Ending units
Lounge chairs	520	260	260
Armchairs		390	130	260
Straight chairs	910	156	754
Total
Gross Profit per unit
Type		Selling price	Cost per unit	Gross Profit
Lounge chairs	90	56.7	33.3
Armchairs		80	50.4	29.6
Straight chairs	50	31.5	18.5
Gross Profit realized:
Type		Sales units	Gross Profit per unit	Total Gross Profit
Lounge chairs	260	33.3		8658
Armchairs		130	29.6		3848
Straight chairs	156	18.5		2886
Total Gross Profit realized			15392
Ending inventory cost:
Type		Ending units	Cost per unit	Ending Inventory cost
Lounge chairs	260	56.7		14742
Armchairs		260	50.4		13104
Straight chairs	754	31.5		23751
Total ending inventory			51597
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