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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

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    Alfred Valenzuela
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    The branch sells merchandise at 125% of the billed price from the home office, who bills at 120% of cost. Given sales, returns, and shipments for the month, the cost of inventory destroyed in a fire can be calculated. Working backwards from net sales at the branch's selling price to determine cost of goods sold at the home office's billed price, and then applying the 120% markup, the amount of inventory destroyed at cost was $52,800.

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    The branch sells merchandise at 125% of the billed price from the home office, who bills at 120% of cost. Given sales, returns, and shipments for the month, the cost of inventory destroyed in a fire can be calculated. Working backwards from net sales at the branch's selling price to determine cost of goods sold at the home office's billed price, and then applying the 120% markup, the amount of inventory destroyed at cost was $52,800.

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    27 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

    Uploaded by

    Alfred Valenzuela
    The branch sells merchandise at 125% of the billed price from the home office, who bills at 120% of cost. Given sales, returns, and shipments for the month, the cost of inventory destroyed in a fire can be calculated. Working backwards from net sales at the branch's selling price to determine cost of goods sold at the home office's billed price, and then applying the 120% markup, the amount of inventory destroyed at cost was $52,800.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from 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 month 240,000

    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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