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alexvane78
alexvane78
28.11.2021 • 
Biology

Market lost most of its inventory in a fire in December just before the yearend physical inventory was taken. Selam handles two principal commodity line, commodity X and commodity Y and uses retail inventory and gross profit method for estimating inventory costs for commodity X and commodity Y, respectively. Presented below is information related to commodity X and Y for current physical period. Commodity Y

Commodity X

Cost

Retail

$ 30,000

Beginning inventory ....$ 18,000 Purchases (gross)... 180,000

260,000

Beginning inventory $15,000

Purchases... .150,000

Purchase return Sales (gross)

10,000

15,000

180,000

Purchase discount.. ....5,000

Sales (gross)........

120,000

Sales discount

5,000

Sales return... 10,000

Freight in

4,500

The accountant of Selam report that no detail or perpetual inventory records of any kind were maintained to estimate the inventory lost. The only pertaining information you are able to obtain are facts from the general ledger given above and assume that merchandise (from X ) costing $40,500 were left undamaged by the fire and (from Y) costing birr 27, 500 were also left

1

undamaged by the fire. Selam's past record show that the gross profit percentage for commodity Y was 25% of its sales.

REQUIRED:

1. Compute the cost of inventory destroyed by fire for commodity X of Selam super Market?

2. Determine cost of merchandise sold for commodity X? 3. Compute the cost of inventory destroyed by fire for commodity Y of Selam super market?

4. If the gross profit percentage for commodity Y was 25% of costs. Then, compute the cost of merchandise sold for commodity Y?


Market lost most of its inventory in a fire in December just before the yearend physical inventory

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