Question

On May 3, 2020, Cheyenne Company consigned 90 freezers, costing $480 each, to Remmers Company. The cost of shipping the freezers amounted to $850 and was paid by Cheyenne Company. On December 30, 2020, a report was received from the consignee, indicating that 45 freezers had been sold for $780 each. Remittance was made by the consignee for the amount due after deducting a commission of 6%, advertising of $210, and total installation costs of $330 on the freezers sold.

(Round answers to 0 decimal places, e.g. 5,275.)
(a) Compute the inventory value of the units unsold in the hands of the consignee.
Inventory value
$enter the inventory value in dollars
(b) Compute the profit for the consignor for the units sold.
Profit on consignment sales
$enter the profit on consignment sales in dollars
(c) Compute the amount of cash that will be remitted by the consignee.
Remittance from consignee

Answer 1

Answer and Explanation:

The computation is shown below;

a.

Inventory Unsold in Hand (90-45) 45

Unit cost Unsold (45 × 480) $21,600.00

Shipping cost on Unit Unsold (850 ÷ 90 × 45) $425.00

Value of Inventory (21600 + 425) $22,025.00

b.

Sale value (45 × 780) $35,100.00

Less: Cost

Unit cost Sold (21600+425) -$22,025.00

Comission of Consignee (35,100 × 6%) -$2,106.00

Advertising cost -$210.00

Installation cost -$330.00

Net Profit $10,429.00

c.

Sale value (45 × 780) $35,100.00

Less: deduction made by consignee

Comission of Consignee (35100 × 6%) -$2,106.00

Advertising cost -$210.00

Installation cost -$330.00

Net Remittance made by consignee $32,454.00