in each of the separate cases, compute the cost of sales:\ncase 1: purchases p 190,000\npurchase discounts…
in each of the separate cases, compute the cost of sales:\ncase 1: purchases p 190,000\npurchase discounts 15,000\npurchase returns & allowances 25,000\nfreight - in 20,000\nmerchandising inventory, beg. 215,000\nmerchandising inventory, end 230,000\ncase 2: merchandise inventory, beg. p 150,000\npurchase discounts 10,000\npurchases 300,000\nfreight - in 20,000\nmerchandise inventory, end 130,000\ncase 3: merchandise inventory, beg. p 210,000\nfreight - in 25,000\npurchases 250,000\nmerchandise inventory, end 320,000\npurchase discounts 20,000\npurchase returns & allowances 15,000\n\n4 - 3\ncompute the missing items\ncase 1: merchandise inventory, beg. p 180,000\npurchases?\ngoods available for sale 370,000\ncost of sales 220,000\nmerchandise inventory, end 150,000\npurchase discounts 10,000\ncase 2: purchases p 350,000\npurchase returns & allowances 15,000\nmerchandise inventory, beg.?\nfreight - in 25,000\ncost of sales?\ntotal goods available for sale 510,000\nmerchandise inventory, end 285,000
Answer
Explanation:
Step1: Recall cost - of - sales formula
The formula for cost of sales is: Cost of Sales = Beginning Merchandise Inventory + Net Purchases - Ending Merchandise Inventory, where Net Purchases = Purchases - Purchase Discounts - Purchase Returns & Allowances+ Freight - In.
Case 1:
Step1: Calculate net purchases
Net Purchases = Purchases - Purchase Discounts - Purchase Returns & Allowances+ Freight - In Net Purchases = $190000 - 15000 - 25000+20000$ Net Purchases = $170000$
Step2: Calculate cost of sales
Cost of Sales = Beginning Merchandise Inventory + Net Purchases - Ending Merchandise Inventory Cost of Sales = $215000 + 170000-230000$ Cost of Sales = $155000$
Case 2:
Step1: Calculate net purchases
Net Purchases = Purchases - Purchase Discounts+ Freight - In Net Purchases = $300000 - 10000+20000$ Net Purchases = $310000$
Step2: Calculate cost of sales
Cost of Sales = Beginning Merchandise Inventory + Net Purchases - Ending Merchandise Inventory Cost of Sales = $150000 + 310000-130000$ Cost of Sales = $330000$
Case 3:
Step1: Calculate net purchases
Net Purchases = Purchases - Purchase Discounts - Purchase Returns & Allowances+ Freight - In Net Purchases = $250000 - 20000 - 15000+25000$ Net Purchases = $240000$
Step2: Calculate cost of sales
Cost of Sales = Beginning Merchandise Inventory + Net Purchases - Ending Merchandise Inventory Cost of Sales = $210000 + 240000-320000$ Cost of Sales = $130000$
Case 4 - 3 Case 1:
Step1: Calculate goods available for sale
Goods available for sale = Cost of Sales+Ending Merchandise Inventory Goods available for sale = $220000 + 150000$ Goods available for sale = $370000$
Step2: Calculate purchases
Purchases = Goods available for sale - Beginning Merchandise Inventory Purchases = $370000 - 180000$ Purchases = $190000$
Case 4 - 3 Case 2:
Step1: Calculate net purchases
Net Purchases = Purchases - Purchase Returns & Allowances+ Freight - In Net Purchases = $350000 - 15000+25000$ Net Purchases = $360000$
Step2: Calculate beginning merchandise inventory
Beginning Merchandise Inventory = Total Goods Available for Sale - Net Purchases Beginning Merchandise Inventory = $510000 - 360000$ Beginning Merchandise Inventory = $150000$
Step3: Calculate cost of sales
Cost of Sales = Total Goods Available for Sale - Ending Merchandise Inventory Cost of Sales = $510000 - 285000$ Cost of Sales = $225000$
Answer:
Case 1 Cost of Sales: $155000$ Case 2 Cost of Sales: $330000$ Case 3 Cost of Sales: $130000$ Case 4 - 3 Case 1 Purchases: $190000$ Case 4 - 3 Case 2 Beginning Merchandise Inventory: $150000$, Cost of Sales: $225000$