Calculate the missing amounts of the income statement a through e.
Answer to Problem 1E
The following table shows the missing amounts of the merchandiser’s profit data.
Particulars | a ($) | b ($) | c ($) | d ($) | e ($) |
Sales | 62,000 | 43,500 | 46,000 |
79,000 (9) | 25,600 |
Cost of goods sold | |||||
Merchandise inventory (beginning) | 8,000 | 17,050 | 7,500 | 8,000 | 4,560 |
Total cost of merchandise purchases | 38,000 |
1,950 (4) |
43,750 (7) | 32,000 | 6,600 |
Merchandise inventory (ending) |
(11,950) (1) | (3,000) | (9,000) | (6,600) |
(4,160) (10) |
Cost of goods sold | 34,050 | 16,000 |
42,250 (6) |
33,400 (8) | 7,000 |
Gross profit |
27,950 (2) |
27,500 (5) | 3,750 | 45,600 |
18,600 (11) |
Less: Expenses | (10,000) | (10,650) | (12,150) | (3,600) | (6,000) |
Net income (loss) |
17,950 (3) | 16,850 | 8,400 | 42,000 |
12,600 (12) |
Table (1)
Explanation of Solution
Cost of goods sold indicates the costs involved for the inventory sold by the business in a specific period of time. Its mathematical representation is as below:
Gross profit represents the revenue after the deduction of cost of goods sold from the net sales of a business. Its mathematical representation is as below:
Calculate the ending merchandise inventory of a’s income statement.
Cost of goods sold = $34,050
Total cost of merchandise purchase = $38,000
Beginning merchandise inventory = $8,000
Calculate the gross profit of a’s income statement.
Sales = $62,000
Cost of goods sold = $34,050
Calculate net income of a’s income statement.
Gross profit = $27,950 (2)
Expenses = $10,000
Calculate the total cost of merchandise purchase of b’s income statement.
Cost of goods sold = $16,000
Beginning merchandise inventory = $17,050
Ending merchandise inventory = $3,000
Calculate the gross profit of b’s income statement.
Sales = $43,500
Cost of goods sold = $16,000
Calculate the cost of goods sold of c’s income statement.
Sales = $46,000
Gross profit = $3,750
Calculate the total cost of merchandise purchase of c’s income statement.
Cost of goods sold = $42,250 (6)
Beginning merchandise inventory = $7,500
Ending merchandise inventory = $9,000
Calculate the cost of goods sold of d’s income statement.
Total cost of merchandise purchase = $32,000
Beginning merchandise inventory = $8,000
Ending merchandise inventory = $6,600
Calculate the sales of d’s income statement.
Gross profit = $45,600
Cost of goods sold = $33,400 (8)
Calculate the ending merchandise inventory of e’s income statement.
Cost of goods sold = $7,000
Total cost of merchandise purchase = $6,600
Beginning merchandise inventory = $4,560
Calculate the gross profit of e’s income statement.
Sales = $25,600
Cost of goods sold = $7,000
Calculate net income of e’s income statement.
Gross profit = $18,600 (2)
Expenses = $6,000
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Chapter 5 Solutions
Principles of Financial Accounting.
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