Answer:
(a)Merchandising Business
Music World Retail
Income statement at December 31, 2017 (extract)
<u>Cost of Goods Sold</u>
Beginning inventory Merchandise 145,000
<em>Add </em>Cost of purchases 340,000
<em>Less</em> Ending inventory Merchandise (120,000)
Cost of Goods Sold 365000
(a)Manufacturing Business
Wave-Board Manufacturing
Income statement at December 31, 2017 (extract)
<u>Cost of Goods Sold</u>
Beginning Finished goods 350,000
<em>Add </em>Cost of goods manufactured 590,000
<em>Less </em>Finished goods (170,000)
Cost of Goods Sold 770000
Explanation:
(a)Merchandising Business
Music World Retail is in the Merchandising Business and its Cost of Sales will account for cost of merchandise purchased.
(a)Manufacturing Business
Wave-Board Manufacturing is in the Manufacturing Business and its Cost of Sales will account for cost of Finished Goods transferred from the Manufacturing Account