Question

Merchandise accounts and computations LO C2 Kleiner Merchandising Company Accumulated depreciation $ 700 11,000 6,600 2,050 13,500 21,500 Beginning inventory Ending Inventory Expenses Net Purchases Net Sales Krug Service Company Expenses Revenues Cash Prepaid rent Accounts pavable Equipment $ 9,700 26,000 900 880 200 2,500 Required a. Compute gross profit, the goods available for sale, and the cost of goods sold 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 Goods available for sale Cost of goods sold Gross profita.. Net income for Krug Service Company b. Net income for Kleiner Merchandising Company

Answer 1

Answer:

The computations are shown below:

Explanation:

a. Goods available for sale is

= beginning inventory + net purchase

= $11,000 + $13,500

= $24,500

The cost of goods sold is

= Goods available for sale - ending inventory

= $24,500 - $6,600

= $17,900

The gross profit is

= Net sales - cost of goods sold

= $21,500 - $17,900

= $3,600

b. For Krug service company, the net income is

= revenue - expenses

= $26,000 - $9,700

= $16,300

For Kleiner Merchandising Company, it is

= Gross profit - expenses

= $3,600 - $2,050

= $1,550