Cost of goods distroyed using Gross Profit Method
(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 $