(Gross Profit Method)

Zidek Corp. requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $38,000. Purchases since January 1 were $92,000; freight-in, $3,400; purchase returns and allowances, $2,400. Sales are made at 33⅓% above cost and totaled $120,000 to March 9. Goods costing $10,900 were left undamaged by the fire; remaining goods were destroyed.

(a) Compute the cost of goods destroyed. (Round percentage of sales computation to 0 decimal places, e.g. 12 and answer to 0 decimal places, e.g. 25,250.)



Cost of goods destroyed $


(b) Compute the cost of goods destroyed, assuming that the gross profit is 33⅓% of sales. (Do not round cost of goods sold percentage.)



Cost of goods destroyed $

(a) Compute the cost of goods destroyed.
Beginning Inventory $38,000
Purchases $92,000
Freight-in, $3,400
Purchase returns and allowances, ($2,400)
Net Purchases 93000
Est. CoGAS 131000

COGS ($120,000/1.33333) 90000
Ending Inventory (131000-90000) 41000
Less. Goods Damaged 10900
(A)Cost of Goods Damaged $30100




(b) Compute the cost of goods destroyed, assuming that the gross profit is 33'% of sales. (Do not round cost of goods sold percentage.)

Beginning Inventory $38,000
Purchases $92,000
Freight-in, $3,400
Purchase returns and allowances, ($2,400)
Net Purchases 93000

Sales 120000
Gross profit (120000*33.33%) 40000
CoGAS 80000
Ending Inventory 13000
Less Goods Undamaged 10900
(B) Cost of goods destroyed 2100