During 2020, Nash Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Nash for a lump sum of $161,595 because it is discontinuing manufacturing operations and wishes to dispose of its entire stock. Three types of chairs are included in the carload. The three types and the estimated selling price for each are listed below. Type No. of Chairs Estimated Selling Price Each Lounge chairs 1,080 $90 Armchairs 810 80 Straight chairs 1,890 50 During 2020, Nash sells 540 lounge chairs, 270 armchairs, and 324 straight chairs. What is the amount of gross profit realized during 2020? What is the amount of inventory of unsold straight chairs on December 31, 2020? (Round cost per chair to 2 decimal places, e. g. 78.25 and final answer to 0 decimal places, e. g. 5,845.)

Instructions are listed below

Explanation:

Giving the following information:

The manufacturer sells the chairs to Nash for a lump sum of $161,595.

Purchase:

Lounge chairs 1,080

Armchairs 810

Straight chairs 1,890

Sell:

Lounge chairs: 540 units at $90 = 48600

Armchairs: 270 units at $80 = 21600

Straight chairs: 324at $50 = 16200

We need to determine the cost of sold goods. First, we will ponderate the lump sum cost for each type of chair.

Total units = 3780

Lounge = 1080/3780 = 0.29

Armchairs = 810/3780 = 0.21

Straight = 1890/3780 = 0.5

Total cost = 161,595.

Lounge = 0.29 * 161595 = $46,862.55 = $43.39

Armchairs = 0.21*161595 = $33,934.95 = $41.89

Straight = 0.5 * 161595 = $80,797.5 = $42.75

Sales = $86400

COGS = (43.39*540) + (41.89*270) + (42.75*324) = 48,591.9

Gross profit = 37,808.1

Inventory = 161595 - 48491.9 = %113,103.1