Question

Calculate the missing amounts, and place your answers in the spaces provided

Sales $95,000

Sales Returns and Allowances ?-----------------------------------------

Sales Discounts 5,000

Net Sales 80,000

Beginning Inventory 72,000

Purchases ? --------------------------------------

Purchase Returns and Allowances 7,000

Purchase Discounts 2,000

Freight-in 8,000

Net Purchased 65,000

Goods Available for Sale ? ---------------------------------------

Ending Inventory ?---------------------------------------

Cost of Goods Sold 60,000

Gross Margin 20,000

Operating Expenses ? ----------------------------------------

Net Income $5,000

SHOW WORK.

Answer 1

Sales - sales returns and allowances- sales discount = Net sales

$95,000- Sales returns and allowances-$5,000 =$80,000

Sales return and Allowances =$95,000-$80,000-$5,000

Sales return and Allowances =$10,000

2. Purchases - Purchase returns and allowances- Purchase discounts = Net Purchases

Purchases -$7,000-$2,000 =$65,000

Purchases =$65,000+$7,000+$2,000

Purchases =$74,000

3. Cost of goods available for sale = Beginning inventory+ Net Purchases+ freight in

cost of goods available for sale =$72,000+$65,000+$8,000

Cost of goods available for sale =$145,000

4. Cost of goods available for sale- Ending inventory = Cost of goods sold

$145,000- Ending inventory =$60,000

Ending inventory =$145,000-$60,000

Ending inventory =$85,000

5. Gross margin - Operating expenses= Net income

$20,000- operating expenses=$5,000

Operating expenses =$20,000-$5,000

Operating expenses=$15,000