Carla Lumber Company handles three principal lines of
merchandise with these varying rates of gross profit on
cost.
Lumber | 25% | |
Millwork | 30% | |
Hardware and fittings | 40% |
On August 18, a fire destroyed the office, lumber shed, and a
considerable portion of the lumber stacked in the yard. To file a
report of loss for insurance purposes, the company must know what
the inventories were immediately preceding the fire. No detail or
perpetual inventory records of any kind were maintained. The only
pertinent information you are able to obtain are the following
facts from the general ledger, which was kept in a fireproof vault
and thus escaped destruction.
Lumber |
Millwork |
Hardware |
||||
Inventory, Jan. 1, 2017 | $248,700 | $88,200 | $44,100 | |||
Purchases to Aug. 18, 2017 | 1,529,500 | 368,800 | 161,900 | |||
Sales to Aug. 18, 2017 | 2,104,000 | 578,500 | 198,800 |
Submit your estimate of the inventory amounts immediately preceding
the fire.
Computation of estimated of the inventory amounts as August 18 (ie on immediately preceding the fire)
Lumber | Millwork | Hardware | |
---|---|---|---|
Beginning Inventory, Jan. 1, 2017 | $248,700 | $88,200 | $44,100 |
Add : Purchases to Aug. 18, 2017 | $1,529,500 | $368,800 | $161,900 |
Cost of goods available for sales | $1,778,200 | $457,000 | $206,000 |
Less : Cost of goods sold : [Sales / (1+ gross profit) |
($1,683,200) [$2,104,000 / 1.25] |
($445,000) [$578,500/1.30] |
($142,000) [$198,800/1.40] |
Estimated inventory as on August 18 | $95,000 | $12,000 | $64,000 |
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