09-24-2010, 04:55 PM
Dear,
Total goods available for sale---- 46,400 ( At billed Price)<b>*</b>
Less Goods sold------------------ 10,400 ( At billed price)<b>**</b>
Goods still available to be sold--------36,000 ( At Billed Price)
Since goods are billed at 20% above cost, so cost for head office will be; 36,000 *100/120 = 30,000.
<b>
Cost of Merchandise Lost by Fire = Rs. 30,000</b>
<b>*</b>Total inventory available for sale is Rs.46,400 (i.e.26,400+20,000).
<b>**</b>Net sales is Rs. 13,000 (15000-2000, Rs. 1,000 is allowance, which will be ignored for the purpose of calculation), which is 25% above billed price, since merchandise are sold at 25% above billed price so the same must be deflated to billed price for the purpose of compatibility with that of merchandise available for sales(which is at billed price).
So, Billed price of merchandise sold will be Rs. 10,400(i.e.13000*100/125).
Let me know if confusion still exists.
Best Regards,
Faisal.
Total goods available for sale---- 46,400 ( At billed Price)<b>*</b>
Less Goods sold------------------ 10,400 ( At billed price)<b>**</b>
Goods still available to be sold--------36,000 ( At Billed Price)
Since goods are billed at 20% above cost, so cost for head office will be; 36,000 *100/120 = 30,000.
<b>
Cost of Merchandise Lost by Fire = Rs. 30,000</b>
<b>*</b>Total inventory available for sale is Rs.46,400 (i.e.26,400+20,000).
<b>**</b>Net sales is Rs. 13,000 (15000-2000, Rs. 1,000 is allowance, which will be ignored for the purpose of calculation), which is 25% above billed price, since merchandise are sold at 25% above billed price so the same must be deflated to billed price for the purpose of compatibility with that of merchandise available for sales(which is at billed price).
So, Billed price of merchandise sold will be Rs. 10,400(i.e.13000*100/125).
Let me know if confusion still exists.
Best Regards,
Faisal.
