Question

Clark's Chemical Company received customer deposits on returnable containers in the amount of $102,000 during 2013. Fifteen 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? (Round your final answer to the nearest whole dollar amount.)

Answer 1

$12,240

Step-by-step explanation:

If the deposits are equivalent to the cost of the containers marked up by 25%, the total cost of goods sold is:

`C = (\$102,000)/(1.25)=\$81,600`

Since 15% of the containers were not returned, the cost of goods sold relative to this forfeiture is given by the total cost multiplied by the fraction not returned:

`C_(f)=\$81,600*0.15=\$12,240`

$12,240 is the cost of goods sold relative to this forfeiture.