Claypool Hardware is the only hardware store in a remote area of northern Minnesota. Some...
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Claypool Hardware is the only hardware store in a remote area of northern Minnesota. Some of Claypool's transactions during the current year are as follows. Nov.5 Sold lumber on account to Benidji Construction, $14,648. The inventory subsidiary ledger shows the cost of this merchandise was $9,880. Nov.9 Purchased tools on account fron Owatonna Tool Company, $4,850. Dec.s Collected in cash the $14,640 account receivable fron Bemidji Construction Dec.9 Paid the $4,058 owed to Owatonna Tool Company. Dec.31 Claypool's personnel counted the inventory on hand and determined its cost to be $182,680. The accounting records, however, indicate inventory of $184,548 and a cost of goods sold of $681, 384. The physical count of the inventory was observed by the company's auditors and is considered correct. Assume that an index of key business ratios in your library shows hardware stores of Claypool's approximate size (in total assets) average net sales of $1 million per year and a gross profit margin of 20 percent. Required: d. Does the business appear to suffer or benefit financially from its remote location
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