Blossom Legler requires an estimate of the cost of goods lost by fire on March...
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Accounting
Blossom Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $47,880. Purchases since January 1 were $90,720; freight-in, $4,284; purchase returns and allowances, $3,024. Sales are made at 33 1/3% above cost and totaled $150,000 to March 9. Goods costing $13,734 were left undamaged by the fire; remaining goods were destroyed.
a. Compute the cost of goods destroyed.
b. Compute the cost of goods destroyed assuming that the gross profit is 33 1/3 % of sales.
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