On May 3, 2014, Brown Motors Limited consigned 80 motorcycles, costing $25,000 each, to Mississauga Motors Inc. The total cost of shipping the motorcycles was $5,800 and was paid by Brown Motors. On December 30, 2014, an account sales report was received from the consignee, reporting that 37 motorcycles had been sold for $33,500 each. A remittance was made by the consignee for the amount due, after deducting a commission of 6%, advertising costs of $3,200, and total inspection costs of $4,200 on the motorcycles sold. Assume that Brown Motors recognizes revenue under the earnings approach.
Instructions
(a) Calculate the inventory value of the unsold units that are in the hands of the consignee.
(b) Calculate the consignors profit on the units sold.
(c) Calculate the amount of cash that will be remitted by the consignee.