Question

Kleiner Merchandising Company Accumulated depreciation $ 700 Beginning inventory 13,500 Ending Inventory 8,100 Expenses 2,300 Net Purchases 17,500 Net Sales 26,500 Krug Service Company Expenses $ 10,500 Revenues 31,000 Cash 850 Prepaid rent 600 Accounts payable 200 Equipment 2,800 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:

Check the following explanation

Explanation:

a) Goods available for sale = Beginning Inventory + Net Purchases

13500 + 17500 = 31000

Cost of goods sold = Goods available for sale - Ending Inventory

31000 - 8100 = 22900

Gross Profit = Net Sales - Cost of goods sold

26500 - 22900 = 3600

b) Net Income for Krug Service Company = Revenues - Expenses

= 31000 - 10500

= 20500

Net Income for Kleiner Merchandising Company = Gross Profit (Computed Above) - Expenses

= 3600 - 2300

= 1300