Question

Two or more items are omitted in each of the following tabulations of income statement data. Fill in the amounts that are missing.
2013 2014 2015
Sales revenue $290,000 ? $410,000
Sales returns and allowances 11,000 13,000 ?
Net sales ? 347,000 ?
Beginning inventory 20,000 32,000 ?
Ending inventory ? ? ?
Purchases ? 260,000 298,000
Purchase returns and allowances 5,000 8,000 10,000
Freight-in 8,000 9,000 12,000
Cost of goods sold 233,000 ? 293,000
Gross profit on sales 46,000 91,000 97,000

Answer 1

Answer:

For 2013:

Net sales = $279,000

Ending inventory = $32,000

Purchases = $242,000

For 2014:

Sales revenue = $360,000

Cost of Goods sold = $269,000

Ending inventory = $24,000

For 2015:

Net sales = $390,000

Sales returns and allowances = $20,000

Beginning inventory = $24,000

Ending inventory = $31,000

Explanation:

Note: See the attached excel file for the tabulated income statement data to see the filled missing amounts. The answers are the ones in bold red color.

For each of the years, the calculations are done as follows:

For 2013:

Net sales = Sales revenue - Sales returns and allowances = $290,000 - $11,000 = $279,000

Ending inventory in 2013 = Beginning inventory in 2014 = $32,000

Purchases = Cost of Goods sold - Beginning inventory + Purchase returns and allowances – Freight-in + Ending inventory = $233,000 - 20,000 + 5,000 - 8,000 + $32,000 = $242,000

For 2014:

Sales revenue = Sales returns and allowances + Net sales = $13,000 + $347,000 = $360,000

Cost of Goods sold = Net sales - Gross profit on sales = $347,000 - $91,000 = $269,000

Ending inventory = Beginning inventory + Purchases - Purchase returns and allowances + Freight-in - Cost of Goods sold = $32,000 + $260,000 - $8,000 + $9,000 - $269,000 = $24,000

For 2015:

Net sales = Cost of Goods sold + Gross profit on sales = $293,000 + $97,000 = $390,000

Sales returns and allowances = Sales revenue - Net sales = $410,000 - $390,000 = $20,000

Beginning inventory in 2015 = Ending inventory in 2014 = $24,000

Ending inventory = Beginning inventory + Purchases - Purchase returns and allowances + Freight-in - Cost of Goods sold = $24,000 + $298,000 - $10,000 + $12,000 - $293,000 = $31,000

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