During 2014, Galarraga Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Galarraga for a lump sum of $5,985, 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 80 $45
Armchairs 60 40
Straight chairs 140 25
During 2014, Galarraga sells 40 lounge chairs, 20 armchairs, and 24 straight chairs.
Instructions
What is the amount of gross profit realized during 2014? What is the amount of inventory of unsold straight chairs on December 31, 2014?