91影视

On May 3, 2017, Eisler Company consigned 80 freezers, costing \(500 each, to Remmers Company. The cost of shipping the freezers amounted to \)840 and was paid by Eisler Company. On December 30, 2017, a report was received from the consignee, indicating that 40 freezers had been sold for \(750 each. Remittance was made by the consignee for the amount due after deducting a commission of 6%, advertising of \)200, and total installation costs of $320 on the freezers sold.

Instructions

(a) Compute the inventory value of the units unsold in the hands of the consignee.

(b) Compute the profit for the consignor for the units sold.

(c) Compute the amount of cash that will be remitted by the consignee.

Step by step solution

01

Meaning of Remittance

A remittance is a monetary payment that is sent to another party. In general, it is a payment of a billmade by the customer to its supplier.

02

Calculation of value of unsold units, profit, and cash

(a) Inventory value of unsold units of freezers

$\begin{array}{rcl}\mathrm{Cost}\mathrm{of}\mathrm{freezers}& =& \mathrm{Cost}\mathrm{per}\mathrm{freezer}脳\mathrm{Freezers}\mathrm{sold}\\ & =& \$500脳40\\ & =& \$20,000\end{array}$

$\begin{array}{rcl}\mathrm{Cost}\mathrm{of}\mathrm{shipping}& =& \frac{\mathrm{Cost}\mathrm{of}\mathrm{shipping}\mathrm{the}\mathrm{freezer}}{\mathrm{Freezers}\mathrm{consigned}}脳\mathrm{Freezers}\mathrm{sold}\\ & =& \frac{\$840}{80}脳40\\ & =& \$420\\ \mathrm{Inventory}\mathrm{value}\mathrm{of}\mathrm{units}\mathrm{sold}& =& \mathrm{Cost}\mathrm{of}\mathrm{freezers}+\mathrm{Cost}\mathrm{of}\mathrm{shipping}\\ & =& \$20,000+\$420\\ & =& \$20,420\end{array}$

(b) Profit

$\begin{array}{rcl}\mathrm{Sales}& =& \mathrm{Sales}\mathrm{price}脳\mathrm{Freezers}\mathrm{sold}\\ & =& \$750脳40\\ & =& \$30,000\\ \mathrm{Commission}& =& \mathrm{Sales}脳6\%\\ & =& \$30,000脳\frac{6}{100}\\ & =& \$18,000\\ \mathrm{Profit}& =& \mathrm{Sales}-\mathrm{Value}\mathrm{of}\mathrm{units}\mathrm{sold}-\mathrm{Commission}-\mathrm{Advertising}\mathrm{expense}-\mathrm{Installation}\mathrm{cost}\\ & =& \$30,000-\$20,420-\$1,800-\$200-\$320\\ & =& \$7,260\end{array}$

(c) Cash

$\begin{array}{rcl}\mathrm{Cash}& =& \mathrm{Sales}-\mathrm{Commission}-\mathrm{Advertising}\mathrm{expense}-\mathrm{Installation}\mathrm{cost}\\ & =& \$30,000-\$1,800-\$200-\$320\\ & =& \$27,680\end{array}$

Unlock Step-by-Step Solutions & Ace Your Exams!

• Full Textbook Solutions

  Get detailed explanations and key concepts

• Unlimited Al creation

  Al flashcards, explanations, exams and more...

• Ads-free access

  To over 500 millions flashcards

• Money-back guarantee

  We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!