Question

Shown here are annual financial data at December 31, 2017, taken from two different companies. Beginning inventory Merchandise $ 125,000 Finished goods $ 380,000 Cost of purchases 320,000 Cost of goods manufactured 572,000 Ending inventory Merchandise 110,000 Finished goods 300,0001. Prepare the cost of goods sold section of the income statement at December 31, 2017, for each company in Merchandising Business and Manufacturing Business.

Answer 1

Answer:

Let Company 1 be Green Company Ltd

Let Company 2 be Yellow Company Ltd

                             Green Company Ltd

                         Partial Income Statement

                   For year ended December 31, 2017

Beginning merchandise inventory          $125,000

Add: Cost of purchases                            $320,000

Goods available for sale                          $445,000

Less: Ending merchandise inventory       $110,000

Cost of goods sold                                    $335,000

                            Yellow Company Ltd

                         Partial Income Statement

                    For year ended December 31, 2017

Beginning finished goods inventory        $380,000

Add: Cost of goods manufactured           $572,000

Goods available for sale                           $952,000

Less: Ending finished goods inventory     $300,000

Cost of goods sold                                     $652,000