32. The average gross profits on sales of the Blank Corporation for the past five years have been 50%. During 19— the sales were $60,000. Purchases during the period were $50,000. In-freight and cartage was $3,000; returned purchases amounted to $2,500. At the beginning of the year the inventory was $20,000. It is estimated that current market prices are 10% above those at time of purchase.
What will be the cost of replacing the amount of stock on hand at the end of the year?
33. In examining a business for the two years ending December 31, 19—, it is found that an item amounting to $750 had been omitted from the initial inventory of the first year; that an error had been made in the footing of the final inventory of that same year, by which that inventory was overstated to the amount of $1,250; and that in pricing the final inventory of the second year, an error was made by which that inventory was understated to the amount of $1,500.
State fully the effect of these errors on the profit of each of the two years.
34. A certain trading corporation desires to prepare its financial statement as of September 30, 19—, but takes no inventory at that date. It has no perpetual inventory records, but the management states that the ratio of gross profit to net sales has remained substantially the same for many years, namely, 25%, and that the rate will remain the same for 19—.
The following information is given and you are asked to prepare a statement showing estimated inventory on hand September 30, 19—:
- Inventory January 1, 19—, $6,100.
- Purchases $28,450.
- Freight-in $985.
- Freight-out $1,200.
- Allowances on sales $2,360.
- Sales $44,500.
- Discounts on purchases $960.
- Buying expenses $2,500.
- Sales salaries $3,000.
- General office expenses $4,000.
35. The ledger accounts of Henry James on December 31, 19—, showed: Accounts Payable $16,125; Accounts Receivable $13,188; Expense $2,450; Debit Balance Merchandise account $15,187. He started in business January 1, 19—, investing $45,000 cash. His total loss for the year was $8,074.50.
Prepare a statement of assets and liabilities and the profit and loss.
Consignments and
Joint Venture