Question

1. Determining Cost of Goods Sold

For a recent year, TechMart reported sales of $39,680 million. Its gross profit was $9,920 million.

What was the amount of TechMart's cost of goods sold? (Enter answer in millions.)
$ million

2. During the current year, merchandise is sold for $106,500 cash and $562,500 on account. The cost of the goods sold is $414,800. What is the amount of the gross profit?
$

3.

Using the lower of cost or market, what should the total inventory value be for the following items:

Item	Inventory Quantity	Cost per Unit	Market Value per Unit	Total Cost Price	Total Market Price	Lower of Cost or Market
A	188	$10	$14	$1,880	$2,632	$
B	102	$18	$14	$1,836	$1,428	$
C	57	$23	$25	$1,311	$1,425	$
						$

4.

Freight Terms

Determine the amount to be paid in full settlement of each of two invoices, (a) and (b), assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period. If required, round the answers to the nearest dollar.

	Merchandise (Invoice Amount)		Freight Paid by Seller		Freight Terms		Returns and Allowances (Invoice Amount)
a.	$8,400		$700			FOB destination, 1/10, n/30	$1,400
b.	2,550		500			FOB shipping point, 2/10, n/30	950

a.	$
b.	$

Answer 1

1)

Sales = $39,680 million

Gross profit = $9,920 million

Cost of goods sold = Sales - Gross profit

Cost of goods sold = 39,680 -9,920

Cost of goods sold = $29,760 million

2)

Merchandise sold = [$106,500 Cash + $562,500 on account] = $669,000

Cost of Merchandise sold = $414,800

Gross Profit = [Sales Value - Cost of goods sold]

Gross Profit = $669,000 - $414,800

Gross Profit = $254,200

3)

Total inventory value would be:

Item	Lower of Cost or market
A	$1880
B	$1428
C	$1311
	$4619

4)

a) Purchase of $8,400 less return of $1,400 less the discount of $70 [($8,400 – $1,400) × 1%] plus $700 of shipping

$8400 - $1,400 - $70+ $700 = $7,630

b) Purchase of $2,250 less return of $950 less the discount of $26 [($2,250 – $950) × 2%]

$2,250 - $950 - $26 = $1,274

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