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OBJECTIVE 1 - During the current year, merchandise is sold for $795,000. The cost of the merchandise sold is $477,000. a) What is the amount of the gross profit? b) Compute the gross profit percentage (gross profit divided by sales). c) Will the income statement necessarily report a net income? Explain. OBJECTIVE 2 - 1 - The following data were extracted from the accounting records of Wedgeforth Company for the year ended November 30, 2010: Merchandise inventory, December 1, 2009 P 210,000 Merchandise inventory, November 30, 2010 185,000 Purchases 1,400,000 Purchases returns and allowances 20,000 Purchases discounts 18,500 Sales 2,250,000 Freight in 14,100 a) Prepare the cost of merchandise sold section of the income statement for the year ended November 30, 2010, using the periodic inventory system. b) Determine the gross profit to be reported on the income statement for the year ended November 30, 2010. OBJECTIVE 2 - 2 - Identify the errors in the following schedule of cost of merchandise sold for the current year ended July 31, 2010: Cost of merchandise sold: $ 140,000 Merchandise inventory, July 31, 2010 Purchases $975,000 Plus: Purchases returns and allowances $12,000 8,000 Purchases discounts 20,000 Gross purchases Less freight in. $995,000 13,500 Cost of merchandise purchased 981,500 Merchandise available for sale $1,121,500 Less merchandise inventory, August 1, 2009 Cost of merchandise sold . 125,000 $ 996,500 OBJECTIVE 2 - 3 - Summary operating data for Paper Plus Company during the current year ended June 30, 2010, are as follows: cost of merchandise sold, $4,000,000; administrative expenses, $500,000; interest expense, $30,000; rent revenue, $100,000; net sales, $6,500,000; and selling expenses, $750,000. Prepare a single-step income statement.

OBJECTIVE 1 - During the current year, merchandise is sold for $795,000. The cost of the merchandise sold is $477,000. a) What is the amount of the gross profit? b) Compute the gross profit percentage (gross profit divided by sales). c) Will the income statement necessarily report a net income? Explain. OBJECTIVE 2 - 1 - The following data were extracted from the accounting records of Wedgeforth Company for the year ended November 30, 2010: Merchandise inventory, December 1, 2009 P 210,000 Merchandise inventory, November 30, 2010 185,000 Purchases 1,400,000 Purchases returns and allowances 20,000 Purchases discounts 18,500 Sales 2,250,000 Freight in 14,100 a) Prepare the cost of merchandise sold section of the income statement for the year ended November 30, 2010, using the periodic inventory system. b) Determine the gross profit to be reported on the income statement for the year ended November 30, 2010. OBJECTIVE 2 - 2 - Identify the errors in the following schedule of cost of merchandise sold for the current year ended July 31, 2010: Cost of merchandise sold: $ 140,000 Merchandise inventory, July 31, 2010 Purchases $975,000 Plus: Purchases returns and allowances $12,000 8,000 Purchases discounts 20,000 Gross purchases Less freight in. $995,000 13,500 Cost of merchandise purchased 981,500 Merchandise available for sale $1,121,500 Less merchandise inventory, August 1, 2009 Cost of merchandise sold . 125,000 $ 996,500 OBJECTIVE 2 - 3 - Summary operating data for Paper Plus Company during the current year ended June 30, 2010, are as follows: cost of merchandise sold, $4,000,000; administrative expenses, $500,000; interest expense, $30,000; rent revenue, $100,000; net sales, $6,500,000; and selling expenses, $750,000. Prepare a single-step income statement.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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OBJECTIVE 1 - During the current year, merchandise is sold for $795,000. The cost of the merchandise sold is $477,000. a) What is the amount of the gross profit? b) Compute the gross profit percentage (gross profit divided by sales). c) Will the income statement necessarily report a net income? Explain. OBJECTIVE 2 - 1 - The following data were extracted from the accounting records of Wedgeforth Company for the year ended November 30, 2010: Merchandise inventory, December 1, 2009 P 210,000 Merchandise inventory, November 30, 2010 185,000 Purchases 1,400,000 Purchases returns and allowances 20,000 Purchases discounts 18,500 Sales 2,250,000 Freight in 14,100 a) Prepare the cost of merchandise sold section of the income statement for the year ended November 30, 2010, using the periodic inventory system. b) Determine the gross profit to be reported on the income statement for the year ended November 30, 2010.
Transcribed Image Text:OBJECTIVE 1 - During the current year, merchandise is sold for $795,000. The cost of the merchandise sold is $477,000. a) What is the amount of the gross profit? b) Compute the gross profit percentage (gross profit divided by sales). c) Will the income statement necessarily report a net income? Explain. OBJECTIVE 2 - 1 - The following data were extracted from the accounting records of Wedgeforth Company for the year ended November 30, 2010: Merchandise inventory, December 1, 2009 P 210,000 Merchandise inventory, November 30, 2010 185,000 Purchases 1,400,000 Purchases returns and allowances 20,000 Purchases discounts 18,500 Sales 2,250,000 Freight in 14,100 a) Prepare the cost of merchandise sold section of the income statement for the year ended November 30, 2010, using the periodic inventory system. b) Determine the gross profit to be reported on the income statement for the year ended November 30, 2010.
OBJECTIVE 2 - 2 - Identify the errors in the following schedule of cost of merchandise sold for the current year ended July 31, 2010: Cost of merchandise sold: $ 140,000 Merchandise inventory, July 31, 2010 Purchases $975,000 Plus: Purchases returns and allowances $12,000 8,000 Purchases discounts 20,000 Gross purchases Less freight in. $995,000 13,500 Cost of merchandise purchased 981,500 Merchandise available for sale $1,121,500 Less merchandise inventory, August 1, 2009 Cost of merchandise sold . 125,000 $ 996,500 OBJECTIVE 2 - 3 - Summary operating data for Paper Plus Company during the current year ended June 30, 2010, are as follows: cost of merchandise sold, $4,000,000; administrative expenses, $500,000; interest expense, $30,000; rent revenue, $100,000; net sales, $6,500,000; and selling expenses, $750,000. Prepare a single-step income statement.
Transcribed Image Text:OBJECTIVE 2 - 2 - Identify the errors in the following schedule of cost of merchandise sold for the current year ended July 31, 2010: Cost of merchandise sold: $ 140,000 Merchandise inventory, July 31, 2010 Purchases $975,000 Plus: Purchases returns and allowances $12,000 8,000 Purchases discounts 20,000 Gross purchases Less freight in. $995,000 13,500 Cost of merchandise purchased 981,500 Merchandise available for sale $1,121,500 Less merchandise inventory, August 1, 2009 Cost of merchandise sold . 125,000 $ 996,500 OBJECTIVE 2 - 3 - Summary operating data for Paper Plus Company during the current year ended June 30, 2010, are as follows: cost of merchandise sold, $4,000,000; administrative expenses, $500,000; interest expense, $30,000; rent revenue, $100,000; net sales, $6,500,000; and selling expenses, $750,000. Prepare a single-step income statement.
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