Sandhill Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $ 37,240. Purchases since January 1 were $ 70,560; freight-in, $ 3,332; purchase returns and allowances, $ 2,352. Sales are made at 33 1/3% above cost and totaled $ 111,000 to March 9. Goods costing $ 10,682 were left undamaged by the fire; remaining goods were destroyed. **Cost of Goods Destroyed Calculation**(a) **Task**: Compute the cost of goods destroyed. - **Instruction**: Round gross profit percentage and final answer to 0 decimal places (e.g., 15% or 125).- **Result**: The computed cost of goods destroyed is $14,848.- **Additional Resources**: eTextbook and Media- **Attempts**: 1 of 3 used(b) **Task**: Compute the cost of goods destroyed, assuming that the gross profit is 33 1/3% of sales. - **Instruction**: Round ratios for computational purposes to 5 decimal places (e.g., 78.72345%) and final answer to 0 decimal places (e.g., 28,987).This exercise involves calculating the financial impact of goods destruction and understanding rounding practices for precise financial estimations.

Cost of goods sold= sales - Sales x Gross profit ratio = $111000 - 111000*33.33% = $74,000

Answered: Sandhill Legler requires an estimate of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Sandhill Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $ 37,240. Purchases since January 1 were $ 70,560; freight-in, $ 3,332; purchase returns and allowances, $ 2,352. Sales are made at 33 ¹/₃% above cost and totaled $ 111,000 to March 9. Goods costing $ 10,682 were left undamaged by the fire; remaining goods were destroyed.

**Cost of Goods Destroyed Calculation**

(a) **Task**: Compute the cost of goods destroyed.
- **Instruction**: Round gross profit percentage and final answer to 0 decimal places (e.g., 15% or 125).
- **Result**: The computed cost of goods destroyed is $14,848.
- **Additional Resources**: eTextbook and Media
- **Attempts**: 1 of 3 used

(b) **Task**: Compute the cost of goods destroyed, assuming that the gross profit is 33 1/3% of sales.
- **Instruction**: Round ratios for computational purposes to 5 decimal places (e.g., 78.72345%) and final answer to 0 decimal places (e.g., 28,987).

This exercise involves calculating the financial impact of goods destruction and understanding rounding practices for precise financial estimations.

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