Question

On May 3, 2020, Marigold Company consigned 80 freezers, costing $490 each, to Remmers Company. The cost of shipping the freezers amounted to $870 and was paid by Marigold Company. On December 30, 2020, a report was received from the consignee, indicating that 40 freezers had been sold for $670 each. Remittance was made by the consignee for the amount due after deducting a commission of 6%, advertising of $210, and total installation costs of $300 on the freezers sold.

(Round answers to 0 decimal places, e.g. 5,275.)

(a) Compute the inventory value of the units unsold in the hands of the consignee.

Inventory value

$enter the inventory value in dollars

(b) Compute the profit for the consignor for the units sold.

Profit on consignment sales

$enter the profit on consignment sales in dollars

(c) Compute the amount of cash that will be remitted by the consignee.

Remittance from consignee

$enter the amount of cash that will be remitted by the consignee rounded to 0 decimal places

Answer 1

a) compuy the inventory value of the unit's unsold in the hands of consignee

Inventory cost =

80units shipped at a cost of $490 (80×$490)= $39200

Add cost of shipping. = $870

Total. ($39200+$870)= $40070

Therefore inventory ($40070×40/80) =$20035

b) computation of consignment profit

Particular	amount
Consignment sales (40×$670)	$26800
(-) cost of units sold ($40070×40/80)	($20035)
(-) commission charged by consignee ($26800×6%)	($1608)
(-) advertising cost	($210)
(-) installation cost	($300)
Profit of consignment sales	$4647

3) cash remitted by the consignee

Particular	amount
Consignment sales	$26800
(-) commission	($1608)
(-) advertising	($210)
(-) installation	($300)
Remittance from consignee	$24682

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