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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 office purchases inventory from the home office at 120% of cost. It then sells items to customers at 125% of the billed price from the home office. On August 1, inventory at the branch was destroyed by fire. Based on the sales, returns, discounts, and shipments for the month, the amount of inventory destroyed at cost was 52,800.

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Alfred Valenzuela
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621 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 office purchases inventory from the home office at 120% of cost. It then sells items to customers at 125% of the billed price from the home office. On August 1, inventory at the branch was destroyed by fire. Based on the sales, returns, discounts, and shipments for the month, 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.
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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 240,000
month
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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