Question

During 2017, Sage Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Sage for a lump sum of $54,900 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 300 $90
Armchairs 300 80
Straight chairs 800 50

During 2017, Sage sells 150 lounge chairs, 120 armchairs, and 110 straight chairs.

What is the amount of gross profit realized during 2017? What is the amount of inventory of unsold straight chairs on December 31, 2017? (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 2017
$
[Entry field with incorrect answer] 37641
Amount of inventory of unsold straight chairs
$
[Entry field with incorrect answer]

Answer 1

Let, All the chairs purchased has been sold off:
Total sales would have been:
Lounge chairs:		300*90	27000
Arm chairs		300*80	24000
Straight chairs		800*50	40000
Total sales would have been:			91000
less: Total c cost			54900
Gross margin			36100
Gross margin rate on sales			39.67%
Gross profit per chair and Total Gross profit earned
Chairs		SP	GP	Number of chairs sold		Gross profit
Lounge chairs		90	35.703	150		5355.45
Arm chairrs		80	31.736	120		3808.32
Straight chairs		50	19.835	110		2181.85
				Gross profit earned		11346
Ending inventory
Chairs		SP	GP	Cost price	Unsold units	Ending inventory
Lounge chairs		90	35.703	54.297	150	8144.55
Arm chairrs		80	31.736	48.264	180	8687.52
Straight chairs		50	19.835	30.165	690	20813.85
				Ending inventory		37646