Question: Tim Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $38,700. Purchases since January 1 were $92,920; freight-in, $3,600; purchase returns and allowances, $2,500. Sales are made at 33 1/3% above cost and totaled $120,000 to March 9. Goods costing $11,840 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. (Round ratios for computational purposes to 5 decimal places, e.g. 78.72345% and final answer to 0 decimal places, e.g. 28,987.)