Question - Tim Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $38,510. Purchases since January 1 were $92,430; freight-in, $4,900; purchase returns and allowances, $2,700. Sales are made at 33 1/3% above cost and totaled $140,400 to March 9. Goods costing $12,510 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.