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At the end of fiscal year on Dec
At the end of fiscal year on Dec. 31, 2019, these accounts appeared in its adjusted trial balance Freight-In Inventory Purchases Purchase Discounts Purchase Returns and Allowances Sales Revenue Sales Returns and Allowances Additional facts 8,000 42,000 580,000 5,000 3,000 1,000,000 30,000 .Ending Merchandise inventory on November 30, 2014, is 60,000 Required: Prepare an income statement through gross profit for the year ended Dec.31,2019
Expert Solution
Solution:
|
Sales revenue |
$ 1,000,000 |
|
|
Less: Sales returns and allowances |
$ 30,000 |
|
|
Net Sales |
$ 970,000 |
|
|
Cost of goods sold |
||
|
Beginning inventory |
42,000 |
|
|
Net purchases* |
572,000 |
|
|
Freight in |
8,000 |
|
|
Less: Ending inventory |
(60,000) |
|
|
Less: Cost of goods sold |
562,000 |
|
|
Gross Profit |
$ 408,000 |
*Net purchases= Purchases – Purchase discount – Purchase returns and allowances
= $ 580,000 – 5,000 – 3,000
= $ 572,000
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