Question

On May 3, 2020, Sunland Company consigned 90 freezers, costing $470 each, to Remmers Company. The...

On May 3, 2020, Sunland Company consigned 90 freezers, costing $470 each, to Remmers Company. The cost of shipping the freezers amounted to $870 and was paid by Sunland Company. On December 30, 2020, a report was received from the consignee, indicating that 45 freezers had been sold for $750 each. Remittance was made by the consignee for the amount due after deducting a commission of 6%, advertising of $180, and total installation costs of $310 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
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Answer #1

Solution-

a) Computation of Inventory value-

Freezer cost [45 * $470] $21150
Shipping cost [$870/90 * 45] 435
Inventory Value $21585

b) Computation of Profit on consignment sales-

Sales [45*$750] $33750
Less :- Cost of freezer 21585
Less :- Commission [$33750*6%] 2025
Less :- Advertising exp 180
Less :- Installation exp 310
Profit on consignment sales $9650

c) Computation of remittance from consignee-

Sale $33750
Less :- Commission 2025
Less :- Advertising exp 180
Less :- Installation exp 310
Remittance from consignee $31235

Ans :-

a) Inventory Value $21585
b) Profit on consignment sales $9650
c) Remittance from consignee $31235
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