Broadway Custom Muffler Manufacturing shipped 60 custom mufflers at a cost of $135.00 each to Charlie Gardells Hot Rod Shop. The mufflers were shipped on August 1, 2021 on consignment. Broadway incurred $300 of freight related costs in shipping the mufflers to Charlie.

The consignment agreement requires Charlie Gardells Hot Rod Shop to sell and install the mufflers at $265.00 each to customers only within Contra Costa County.

Broadway pays a $75 commission to Charlie Gardells Hot Rod Shop for each muffle sold and installed. In addition, Broadway allows Charlie a monthly advertising allowance of $250.

The agreement also requires Charlie Gardells Hot Rod Shop to submit an accounting at the end of each month showing the sales/installations for the month and the inventory still on hand at month end. In addition to submitting the report, Charlie Gardells Hot Rod Shop is required to remit full payment to Broadway for all mufflers sold/installed less commissions and monthly advertising allowance.

The report received from Charlie Gardells Hot Rod Shop for the month of August 2021 indicated the following.

Mufflers Sold/Installed 31 Mufflers on Hand 29

Required:

a. Prepare a detailed calculation showing the value of Broadways consignment inventory at August 31st.

b. Prepare a detailed calculation of Broadways profit on its consignment inventory for the month of August.

c. Prepare a detailed calculation of the amount of cash Broadway is to receive from Charlie Gardells Hot Rod Shop for the month of August.

d. Reconcile Broadways cash to be received, to its net profit.