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    bc912 Posts: 2, Reputation: 1
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    #1

    Jan 15, 2011, 09:41 PM
    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 $


    Mannyselorm's Avatar
    Mannyselorm Posts: 1, Reputation: 1
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    #2

    Nov 9, 2011, 02:13 PM
    (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
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