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FINAL ROUND-Difficult-AFAR 1. The Home Office Bills Its Branch at 120% of Cost. in Turn, The Branch Sells The Merchandise To

The branch sells merchandise at 125% of the billed price from the home office, who bills at 120% of cost. Given sales, returns, and shipments for the month, the cost of inventory destroyed in a fire can be calculated. Working backwards from net sales at the branch's selling price to determine cost of goods sold at the home office's billed price, and then applying the 120% markup, the amount of inventory destroyed at cost was $52,800.

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Alfred Valenzuela
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235 views2 pages

FINAL ROUND-Difficult-AFAR 1. The Home Office Bills Its Branch at 120% of Cost. in Turn, The Branch Sells The Merchandise To

The branch sells merchandise at 125% of the billed price from the home office, who bills at 120% of cost. Given sales, returns, and shipments for the month, the cost of inventory destroyed in a fire can be calculated. Working backwards from net sales at the branch's selling price to determine cost of goods sold at the home office's billed price, and then applying the 120% markup, the amount of inventory destroyed at cost was $52,800.

Uploaded by

Alfred Valenzuela
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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FINAL ROUND-Difficult- AFAR

1. The home office bills its branch at 120% of cost. In turn, the branch sells the merchandise to
customers at 125% of the billed price. On August 1, 2019, all of the merchandise of the branch
were destroyed by fire. The information was available:

Inventory beginning, at billed price 24,000

Shipments from home office during the month 240,000

Sales 264,000

Sales Return 13,200

Sales Discounts 6,600

What is the amount of inventory at cost destroyed by fire?

A. 57,200
B. 52,800
C. 19,360
D. 96,800

Sales 264,000.00

Sales Return 13,200.00

Net Sales 250,800.00


COGS Rate (100%/125%) 80%

COGS @ billed price 200,640.00

Beg. Inventory at billed price 24,000.00

Shipment from head office during the month 240,000.00

Total Goods Available for Sale @ billed price 264,000.00

COGS at billed price (200,640.00)

Ending Invty. @ billed price 63,360.00


HO Mark-up 120%
Ending invty. Destroyed @ Cost 52,800.00

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