Question

On May 3, 2020, Pina Company consigned 90 freezers, costing $470 each, to Remmers Company. The cost of shipping the freezers amounted to $870 and was paid by Pina Company. On December 30, 2020, a report was received from the consignee, indicating that 45 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 $180, and total installation costs of $310 on the freezers sold:
a. Compute the inventory value of units unsold in the hands of the consignee.

Inventory value $________

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

Profit on consignment sales $________

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

Remittance from consignee $________

Answer 1

Answer:

a. Inventory value of units unsold in the hands of the consignee.

$ 480 * 45= $ 21600

b. The profit for the consignor for the units sold = $12,150

c. The amount of cash that will be remitted by the consignee  $10,960.4

Explanation:

a. Inventory value of units unsold in the hands of the consignee.

$ 480 * 45= $ 21600

b. The profit for the consignor for the units sold = $12,150

c. The amount of cash that will be remitted by the consignee  $10,960.4

Remittance from consignee $________

Freezers 90 *$ 470= $ 42300

Freight                     $ 870

Total Cost               $ 43,170  for 90 freezer

Cost of One freezer = $ 43170/ 90= 479.6 = $ 480

Sales            45* $750=  $ 33750

Cost of 45 freezers=  $ 21600

Gross Profit               12150

Installation Charges   $ 310

Advertising                $ 180

Profit                           $11660

Commission                699.6

Net Profit             $  10,960.4

Working : 6 % of $11660= $ 699.6