2012 AICPA Released Questions #32

  • Creator
    Topic
  • May 9, 2012 at 12:28 am #170502
    Natashah
    Participant

    I can not figure out what I am doing wrong for the life of me. Can someone please explain this to me?

    Kauf Co. had the following amounts related to the sale of consignment inventory:

    Cost of merchandise shipped to consignee $72,000

    Sales value for two-thirds of inventory sold by consignee $80,000

    Freight cost for merchandise shipped $7,500

    Advertising paid for by consignee, to be reimbursed $4,500

    10% commission due the consignee for the sale $8,000

    What amount should Kauf report as net profit(loss) from this transaction for the year?

    a. $(12,000) b. $8,000 c. $14,500 d. $32,000

    Explanation

    Choice “c” is correct.

Viewing 4 replies - 1 through 4 (of 4 total)
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  • May 9, 2012 at 12:44 am #343208
    Anonymous
    Inactive

    Cost of 100% Shipped on Consignment = 72,000 so Cost of 67% sold = 48,000; cost of 100% Shipped = 7,500 so Cost of 67% shipped = 5,000

    Sales = $80,000

    COGS = 48,000

    Freight = 5,000

    Advertising = 4,500 (it says “to be reimbursed” so you count all of it)

    Commission = 8,000

    Profit = $14,500

    May 9, 2012 at 12:47 am #343209
    Natashah
    Participant

    Thank you so much! It was taking the 67% of the freight that was throwing me off.

    May 9, 2012 at 3:04 am #343210
    Anonymous
    Inactive

    Kricket, it's so sexy when you talk FAR-si.

    May 9, 2012 at 3:25 am #343211
    mparker1904
    Member

    @Bdo Haha you are such a dork.. In a good way though

    BEC 76
    AUD 86
    REG 78
    FAR 76 DONE!

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