Executive Fashions Sold Four-Sevenths of Its Inventory at Cost in a Bankruptcy

question 147

Essay

Executive Fashions sold four-sevenths of its inventory at cost in a bankruptcy sale. The remainder was sold to liquidators for $6,700 representing 45% of the cost of the goods.
a) What was the original cost of the inventory that was sold to the liquidators?
b) What were the proceeds from the bankruptcy sale?

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Definitions:

Legal Assent

The express or implied agreement to the terms of a contract, demonstrating a mutual understanding and intention to be bound by those terms.

Courts

Institutions established by governmental entities to settle disputes through a legal process by applying laws and issuing decisions, rulings, or judgments.

Unilateral Mistake

A unilateral mistake occurs when only one party to a contract is mistaken about a basic assumption on which that party entered into the contract.

Mutual Mistake

A situation in contract law where all parties involved have a mistaken belief about a basic assumption on which the contract is based.