Question

QS 5-3 Merchandise accounts and computations LO C2 Kleiner Merchandising Company Accumulated depreciation $ 700 Beginning inventory 5,000 Ending Inventory 1,700 Expenses 1,450 Net Purchases 3,900 Net Sales 9,500 Krug Service Company Expenses $ 12,500 Revenues 14,000 Cash 700 Prepaid rent 800 Accounts payable 200 Equipment 1,300 Required: a. Compute the goods available for sale, and the cost of goods sold and gross profit for the merchandiser. Hint: Not all information may be necessary. b. Use the above information from a service company and from a merchandiser to compute net income.

Answer 1

Answer:

a.  $8,900

b.  $7,200

c.  $2,300

d.  $850

Explanation:

Goods Available For Sale Calculation :

Beginning inventory             5,000

Add Net Purchases               3,900

Goods Available For Sale     8,900

Cost of Goods Sold Calculation :

Goods Available For Sale     8,900

Less Ending Inventory          (1,700)

Cost of Goods Sold               7,200

Gross Profit Calculation :

Net Sales                               9,500

Less Cost of Goods Sold     (7,200)

Gross Profit                            2,300

Net Income Calculation :

Gross Profit                            2,300

Less Expenses                      (1,450)

Net Income                               850