Question

clark's chemical company received refundable deposits on returnable containers in the amount of $100,000 during 2024. fourteen percent of the containers were not returned. the deposits are based on the container cost marked up 25%. what is cost of goods sold relative to this forfeiture?

Answer 1

the cost of goods sold relative to this forfeiture is $68,800.

Step-by-step explanation:

We can start by finding the total amount of deposits that should have been returned based on the marked up cost of the containers:

Total deposits = $100,000

Markup percentage = 25%

Cost of containers = (100% / 125%) * $100,000 = $80,000

If 14% of the containers were not returned, then the value of these containers is equal to the marked up cost of the containers times 14%:

Value of unreturned containers = 14% * $80,000 = $11,200

The cost of goods sold relative to this forfeiture is equal to the cost of the containers minus the value of the unreturned containers:

Cost of goods sold = $80,000 - $11,200 = $68,800

Therefore, the cost of goods sold relative to this forfeiture is $68,800.